Legal Guardian vs Power of Attorney
Family caregivers ask about being a legal guardian vs power of attorney. When is one versus the other needed?
The answer to this question depends on the circumstances. Legal guardian vs power of attorney also depends on the powers granted by state statutes.
Additionally, the experience of judges in probate and chancery courts must be considered. Some judges rubber-stamp all guardianship petitions. Others who recognize that situations vary offer more in-depth consideration and may leave power-of-attorney appointments in place.
In simple terms, a power of attorney is a document signed by a principal, with an agent accepting responsibilities and being granted specific powers related to health care or financial decisions.
Legal guardian vs power of attorney can be confusing for older adults and family members, especially when loved ones are diagnosed with dementia or Alzheimer’s disease.
In this article, Pamela D Wilson, a professional fiduciary and expert witness, offers easy-to-understand information by relating legal guardianship vs. power of attorney to examples in state statutes.
The Uniform Power of Attorney Act (UPOAA)
The Uniform Power of Attorney Act (UPOAA) issued by the Uniform Law Commission contains safeguards. These include preventing and detecting financial abuse, defining agents’ authority, and providing guidelines for individuals acting as agents.
States that have enacted the UPOAA have statutes and forms on their government websites for consumer access.
For example, Iowa Code Chapter 633B is based on the Uniform Power of Attorney Act for financial matters. Health care decisions are based on Iowa Code Chapter 144B.
Page 20-25 of Iowa Code Chapter 633B states, “a document substantially in the following form may be used to create a statutory power of attorney that has the meaning and effect prescribed by this chapter.” This information offers a simple method to create an Iowa legal power of attorney document.
Cautions About Use of the Uniform Power of Attorney Forms
In states that have adopted the Uniform Power of Attorney Act (UPOAA), it is important to understand that state forms can be modified. This is important when the principal has specific wishes to be carried out.
General state templates for power of attorney are a great starting point, but should not be considered final without a close review.
Depending on when a state adopts the Uniform Power of Attorney Act, current acts or state statutes may be repealed or replaced. This does not mean that a power of attorney document needs to be redrafted.
However, it is important to understand if a previously issued document is durable. The principal should also confirm whether any other modifications have been made or should be made.
Power of attorney documents without a durable power of attorney provision terminate upon the principal’s incapacity. A non-durable power of attorney document can necessitate the appointment of a legal guardian or conservator.
If you or a loved one has a power of attorney document, check whether it remains in effect beyond incapacity. If not, you may want to consider a revision or an addendum to add this provision.
Compensation of Agent Example
Be cautious when using state forms to create power-of-attorney documents. For example, Iowa Code Chapter 633B, section 633B.112 Reimbursement and compensation of agent.
This section states, “Unless the power of attorney otherwise provides, an agent who is an individual is entitled to reimbursement of expenses reasonably incurred on behalf of the principal but not to compensation. If a power of attorney does provide for compensation, or if the agent is a bank or trust company authorized to administer trusts in Iowa, the compensation must be reasonable under the circumstances.”
So, for example, a professional fiduciary accepting a power of appointment under Iowa 633B.112 would request that this section be modified to allow compensation according to the fiduciary’s rate chart.
An attorney with no experience as a power of attorney agent may not think to ask the principal if they want this section changed so that a family member can be paid for work completed in a power of attorney role.
If this does not occur and the power of attorney agent pays themselves or expects compensation, there can be serious consequences when the court declines payment. The power of attorney agent may also be accused of financial exploitation or conflict of interest.
Power of Attorney Document Details
According to Wilson, “some attorneys who draft estate planning documents like power of attorney and living wills lack real-life experience in the roles. As a result, they fail to discuss potential issues with clients and modify documents accordingly.”
A family member who accepts the agent role as power of attorney may also request this section to be modified if, in addition to power of attorney responsibilities, they are serving in a caregiving or care management capacity.
In this circumstance, a separate, notarized, and witnessed fee agreement with detailed information about compensated work and payment is critical.
If you are an individual or family member who copies information from a state website to create a power of attorney document, make sure you understand the consequences. Not doing so can result in creating a power of attorney document that is unenforceable or is missing important updates that you may not know are important to add.
Legal Guardianship vs Power of Attorney
Guardianship or conservatorship is considered the most restrictive court appointment. The guardian or conservator has full authority to make all medical and financial decisions for the ward, which is the term for the person under guardianship or conservatorship.
Legal guardianship is known by different words in each of the United States. For example, some states, like California, use the terms “conservator of the person” for health care and “conservator of the estate” for financial matters.
In Colorado, where I served as a professional fiduciary, the terms “guardianship” and “conservatorship” are used. In Colorado, professional fiduciaries, unlike family members, can serve in only one role to avoid a potential conflict of interest.
Monitoring Fiduciary Activities
California and Oregon allow professionals, fiduciaries, and attorneys to serve as conservators of the person and conservators of the estate.
While court systems in both states are responsible for monitoring fiduciary activities, serious questions have arisen in the past, as identified in a Comprehensive Study of Oregon Courts.
Banks and trust companies authorized to do business in California and Oregon are exempt from professional guardianship standards. This means they do not need to comply with the same registration or educational requirements and are not required to provide detailed invoices for payment of services.
This unequal requirement for professional fiduciaries vs. trust companies and banks allows fiduciaries that organize as trust companies to avoid oversight.
Additionally, a conflict of interest with a single company named to manage personal and financial matters has resulted in poor care for persons under guardianship. Not all professional organizations have the expertise to manage both health care and financial matters.
Is Being a Legal Guardian vs a Power of Attorney Necessary?
In situations where the principal agrees with the actions of the power of attorney agent, even if the principal has advanced Alzheimer’s disease or dementia, legal guardianship may not be necessary.
As a power of attorney agent, it’s important to understand the responsibilities of medical and financial power of attorney.
Litigation is more common when family members and professionals disagree about care or financial management. These court cases usually involve allegations of power of attorney abuse or neglect, a family member seeking to be appointed as a power of attorney agent, whether a power of attorney agent should be removed, or the appointment of a guardian.
As a court-appointed guardian, conservator, medical and financial power-of-attorney agent, and trustee, Pamela D. Wilson has been involved in these cases since 2007.
For example, as a power of attorney agent, Wilson was involved in a court matter in which a family member sought guardianship. The court denied the guardianship petition because the durable power of attorney document provided sufficient protection for the principal. There was no need for a more restrictive option, such as appointing Wilson as guardian.
State Differences Exist in Guardianship and Conservatorship Statutes
Guardianship statutes, court appointments, capacity evaluations, reporting requirements, and court oversight vary significantly by state.
For example, New York’s Guardianship of an Incapacitated Person (Article 81 Guardianship Mental Hygiene) does not require a neuropsychological evaluation to confirm incapacity or a capacity form, as do other states.
Additionally, while other states require guardians to meet certain standards, New York offers a simple online training video. Being a guardian is a serious responsibility.
Setting a low bar for serving in this position can place vulnerable persons at risk and prevent family members from visiting or helping loved ones when professionals are appointed.
Guardianship should always focus on the care of the person and on the least restrictive alternatives. Persons under guardianship deserve to enjoy the best life possible.
Read the statutes for your state regarding guardianship, conservatorship, and power of attorney to become more informed about the process and responsibilities. Understanding the difference between a legal guardian and a power of attorney is critical if you are serving in either role.
Becoming more educated is the path toward understanding the differences between legal guardian vs power of attorney, and the steps you may need to take to protect a loved one or yourself from the wrong person being appointed to either role.
If you’re looking for easy-to-understand, practical information about being a power of attorney agent, guardian, or conservator, or someone in your family who is acting in one of these roles, schedule a virtual or telephone consultation with Pamela D Wilson.
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