Parents living longer than ever. The first generation of baby boomers have turned 70. Cases of Alzheimer’s and dementia are on the rise. Health care costs are increasing.
We oftentimes get calls from adult children who want to hire us to “get power of attorney over their parent” to help them with bills and medical care. Unfortunately, that is not the way a power of attorney works. While the adult child can certainly schedule the appointment with us and even pay for the legal document, it is the parent’s document, and the parent is the client. Attorneys are confined to the parent’s wishes.
If the elderly parent already lacks the capacity to enter into a contract or make legal decisions, or if the parent does not understand the effect of the power of attorney document, it is too late for the adult child to be named as their parent’s agent under a power of attorney. If the elderly parent lacks capacity and needs help handling his or her affairs, the adult child may need to become legal guardian.
What the differences between Power of Attorney & Guardianship?
With a power of attorney, the principal names an agent to act on the principal’s behalf in the event of incapacity. It enables the agent to handle the principal’s business and financial affairs. A health care power of attorney is a separate document that names an agent to act on behalf of the principal for medical decisions. The agent’s powers are very broad unless expressly limited by the documents. However, there is nothing preventing the principal himself from conducting business on his own.
With guardianship, a court makes a finding that the principal lacks capacity and removes that individual’s authority to make decisions. The court appoints a guardian to make those decisions from then on out. Once an institution, like a bank, learns of the guardianship, it would not be permitted to listen to the principal’s instructions – only the guardian’s. The court’s order is permanent until the principal regains capacity and a subsequent hearing is held to restore his or her rights. Guardians have to file reports and/or yearly accountings with the court.
As you can see, guardianship is not to be taken lightly. A court’s adjudication of incompetency essentially strips away a person’s rights, which is why we recommend getting power of attorney documents in place before capacity becomes an issue. It is also more work on the guardian’s part due to the court proceedings and reporting requirements. Readers should not only get their documents in place but talk to their parents or other elderly loved ones and encourage them to visit with an attorney before incapacity becomes an issue.
 There are three types of guardians: guardian of the estate (authority over property), guardian of the person, or general guardian (both estate and person).
 Unless the court orders a limited guardianship allowing the principal to retain certain legal rights and privileges to which the ward was entitled before the ward was adjudged incompetent.