What's the Difference Between Power of Attorney and Guardianship?

Guardianship vs. Power of Attorney: Choosing the Right Legal Protection

A guardianship and a power of attorney are legal tools that can be used to help manage the affairs of someone who lacks the legal capacity to make decisions on their own. However, they differ in how they are created and the type and amount of power they grant. With a power of attorney, the individual generally chooses who they want to act on their behalf. A guardianship is typically an involuntary proceeding in which the court chooses who will act as the legal guardian of the incapacitated person. Understanding the differences between a guardianship vs. a power of attorney is a critical part of effective estate planning.

Understanding Legal Capacity

“Legal capacity” refers to a person’s ability under the law to understand and make decisions for themselves. It means the individual understands the nature and consequences of their actions, such as signing a contract, making a will, creating a power of attorney, or managing their personal, medical, or financial affairs. When an individual can no longer understand or appreciate the consequences of their actions, it raises concerns about their legal capacity and their safety, well-being, and potential for being exploited by others.

Adults are generally presumed to have legal capacity unless a court determines otherwise. A court may find a person lacks legal capacity due to mental illness, cognitive decline, developmental disability, or severe injury. When an individual lacks legal capacity, a power of attorney or legal guardianship may be necessary to protect their interests and assist them in making legal, financial, medical, and other decisions.

Power of Attorney vs. Guardianship

A guardianship and a power of attorney are both legal tools that can be used to help manage the affairs of someone who lacks the legal capacity to make decisions on their own. However, they differ in how they are created and the type and amount of power they grant.

Power of Attorney

A power of attorney is a voluntary legal arrangement in which a person (the “principal”) gives another individual (the “agent” or “attorney in fact”) the authority to make legal, financial, medical, or other decisions on their behalf. A power of attorney is established while the principal has the legal capacity to make their own decisions.

Nevada recognizes various types of power of attorney that can be used in different situations and to serve different needs.

• A Financial Power of Attorney authorizes an agent to act on behalf of the principal in business, financial, and legal matters, such as managing bank and retirement accounts, buying and selling real estate and other property, paying bills, and handling investments.
• A Limited Power of Attorney grants the agent authority to act in specific situations, such as selling a particular piece of property, managing a single transaction, or for a limited period of time.
• A Medical or Healthcare Power of Attorney authorizes the agent to make medical or health-related decisions when the principal cannot make them on their own.
• A Special Purpose Power of Attorney may be tailored for a specific use, such as for a single real estate transaction, to title a vehicle, in tax matters, or to assist adults with cognitive or intellectual disabilities.

Guardianship

A guardianship is a court-ordered relationship that is created when someone (the “protected person”) is deemed legally incapacitated or is unable to manage their legal, financial, medical, or other matters. The court appoints a guardian to make these decisions on their behalf.

Key Differences in Guardianship vs. Power of Attorney

An individual can set up a power of attorney as part of their estate plan before they need one. They can appoint an agent who will act on their behalf to handle their legal and financial matters, as well as medical and healthcare decisions.

If you have a power of attorney, the transition can be almost seamless. The attorney-in-fact provides the power of attorney to the medical provider or financial institution and can begin acting as the attorney-in-fact.

Guardianship can only be obtained after a person has become incapacitated, and the court will decide who will have decision-making power. While guardianship can be a necessary and important tool, it represents a significant loss of independence, and there can be a delay between when a person becomes incapacitated and when the guardian can take over.

A guardianship can also be contested. When an individual requests guardianship, the potential protected person can represent themselves (or hire a lawyer) to contest whether a guardianship is necessary or request that a specific person be named as the guardian. The process can be even more complicated when more than one person wants to be named as the guardian, such as when two siblings both want to care for an aging parent.

Contact the Vander Laan Law Firm Today

The Vander Laan Law Firm provides probate, estate planning, and guardianship services to individuals and families throughout Douglas County, Carson City, and Lyon County. Discover what makes our approach to estate planning unique, then call (775) 461-2897 or contact our law office to schedule a free consultation to discuss your needs and how attorney Natalia Vander Laan can assist you.