Power of attorney and guardianship are tools that allow someone to act on another’s behalf should they become incapacitated.

It’s an important decision — with an important distinction that exists between the two terms — to be made on behalf of a loved one who may be in failing health or suffering from diminished mental capacity.

Elderly people often need someone to help not just with the big decisions like wills and long-term care, but with day-to-day needs like paying bills or purchasing medication.

With a power of attorney a person is able to choose who they want to take action for them. Guardianship is a legal relationship between the guardian and the person who is too incapacitated to see to their own affairs.

Individuals make the choice of power of attorney, while in a guardianship proceeding the court chooses who will act as guardian.

Power of Attorney

The durable power of attorney is one of the most important estate planning instruments available. A power of attorney allows the person you appoint — known as your “attorney-in-fact” or “agent” — to act in place of you, the “principal,” if you ever become incapacitated.

Power of attorney gives someone the authority to act on business or financial matters like banking, real estate or insurance. Designating a health care power of attorney gives someone the power to make decisions on treatment and care or end of life decisions.

You must be mentally capable of appointing a power of attorney, which can be revoked at any time. The power of attorney must act at your direction and on behalf of your best interests.

Court proceedings aren't necessary. You can set up a power of attorney legally through proper documents.

If you don’t have a durable power of attorney, no one can represent you unless a court appoints a guardian, also called a conservator in some states.

Guardianship

Like a power of attorney, a guardianship is necessary when you can no longer make important decisions for yourself, whether they are medical or financial decisions. Unlike a power of attorney, a guardianship is established when you are no longer mentally able to make decisions or to name a power of attorney.

A guardianship may not be necessary if you have appointed a general durable power of attorney, which is still effective even if you become mentally incapacitated. A guardianship, however, is needed if you are refusing to allow the power of attorney to act for you, and your actions are detrimental to your health and safety.

Another difference is that a guardianship is established through a court proceeding. The person seeking the guardianship petitions the court to be appointed guardian over someone, known legally as the ward.

The proposed ward must be given 20 days notice of a hearing. A notarized, signed, doctor’s affidavit is necessary and the legal proceedings cost money.

Avoiding Guardianship

Again, the best way to avoid a guardianship is to appoint someone as your power of attorney.

Sometimes a guardianship is still needed. You should name that person in your power of attorney document.

This allows you to choose a trusted person while you have the mental acuteness to do so, and it can prevent future disagreements between family and loved ones as to who should fill the role.

SOURCES: RMP LLP, Woodard Law Group, elderlawanswers.com, agingcare.com