Both a guardianship and a power of attorney are methods of placing the control of someone’s affairs into the hands of someone else. There are differences between the two and certain advantages and disadvantages that you should discuss with your Nevada Estate Planning attorney before making a choice as to which is most appropriate for you.
Incapacity Planning in Reno: What is a Guardianship?
A guardianship is a legal proceeding during which the court appoints someone to become the guardian for someone else who has become incapacitated in some way. The guardian serves as the decision maker for the ward. The guardian can be placed in control over the ward’s property, finances or care of the ward himself.
The guardian’s job is always to protect the ward and his assets. The guardian is required to obtain a court order before making certain decisions which is preceded by filing a petition with the court. Some of those important decisions include withholding life-saving medical care or terminating parental rights. The guardian is also required to make an annual report to the court regarding the status of the ward and his or her personal and financial affairs.
Incapacity Planning in Reno: What is a Power of Attorney?
A power of attorney is an estate planning document which authorizes an “agent” to act on behalf of the “principal.” A financial or property power of attorney can be used to pay bills, manage bank accounts, or complete other types of financial transactions. A health care power of attorney can be used to make medical decisions. The power of attorney is intended to specify the specific tasks the agent is authorized to perform. The authority you convey can either start immediately (“immediate”) or only after a certain event occurs (“springing”). A power of attorney does not require you to give up the right to manage your own affairs, but simply allows someone else to act on your behalf if that becomes necessary.
The differences between the two
One difference is that a power of attorney is a private method, whereas a guardianship is a public proceeding carried out and monitored by the court. A power of attorney is less expensive than a guardianship, primarily because of the court involvement required with a guardianship. Another difference is that, with a guardianship, you may not have any control over who is chosen to act on your behalf. However, with a power of attorney, you are entirely free to identify the person who will serve as your agent.
With regard to the scope of authority, a power of attorney is generally more limited in scope. Furthermore, some institutions may be hesitant, or even refuse to honor the terms of power of attorney. That is primarily because of the risk of fraudulent use by agents. On the other hand, a guardian is given broad legal authority, backed by the courts, which is recognized by financial institutions, as well as health care providers.