Scenario: When Jane's father was diagnosed with early-stage dementia, he needed help making important decisions that Jane was not sure her father fully understood. Jane felt paralyzed not knowing what to do or who to turn to for advice.

The Importance of Surrogate Decision Making

When it comes to managing someone else's affairs—whether financial, medical, or personal—two of the most common legal tools are power of attorney and guardianship. Both serve to protect vulnerable individuals, but they differ significantly in how they are established, their scope, and the level of control they grant. Understanding the distinction between these two options is crucial for families and caregivers making decisions about long-term care and financial planning.

Power of Attorney: A Voluntary and Flexible Tool

A power of attorney (POA) is a legal document that allows one person, known as the principal, to designate another person, known as the agent or attorney-in-fact, to make decisions on their behalf. The principal must be of sound mind when signing the POA, meaning they are capable of understanding the document and its implications.

There are several types of powers of attorney, the most common being the following:

• General Durable Power of Attorney: Grants broad authority to the agent to manage the principal's financial affairs, make legal decisions, and perform a variety of other tasks. This type of POA can be effective when it is signed, or it can only be effective if the principal becomes disabled (known as a “Springing POA”). In either case, the POA remains in effect if the principal becomes disabled.
• Limited Power of Attorney: Grants the agent specific authority, such as selling a home or managing a bank account, for a limited period or under specific conditions.
• Medical Power of Attorney: Grants the agent authority to make healthcare decisions if the principal is disabled or incapacitated.

A POA is revocable, meaning the principal can change or terminate it at any time, provided they are still competent. Additionally, it's often the preferred option for those who want to maintain control over who manages their affairs and the extent of that authority.

Guardianship: Court-Appointed Control

Guardianship, on the other hand, involves a court process and is used when an individual is no longer competent to sign a POA. The court appoints a guardian, often a family member, to make decisions on behalf of the incapacitated person, now referred to as the ward.

There are two main features to a guardianship:

• Guardianship of the Person: Grants the guardian authority to make decisions about the ward's personal matters, such as healthcare, living arrangements, and daily activities.
• Guardianship of the Estate: Grants the guardian authority to manage the ward's financial matters, such as paying bills, managing investments, and protecting assets.

Unlike a POA, guardianship removes the ward's legal right to make decisions, and the guardian has a duty to act in the ward's best interest. The court oversees the guardian's actions to ensure the guardian is acting appropriately and the ward is protected. Guardianship is a more involved and costly process, requiring legal filings, hearings, and ongoing court supervision.

Key Differences

1. Voluntary vs. Involuntary: A POA is voluntarily granted by a competent person, whereas guardianship is an involuntary imposition of a surrogate decision maker by the court when a person is no longer capable of granting authority themselves.
2. Control: With a POA, the principal retains some control and can revoke the document as long as they are competent. Guardianship removes most decision-making power from the ward, and only the court can terminate or modify the arrangement.
3. Speed and Cost: Establishing a POA is typically faster and less costly than seeking guardianship, which involves court fees, legal representation, and ongoing oversight.
4. Less Restrictive Option: A POA is far less restrictive than a guardianship, so it should always be the case that a POA is considered before applying for guardianship. Only if a POA will not work should guardianship be sought.

Choosing the Right Option

When deciding between a power of attorney and guardianship, the individual's level of capacity is the determining factor. If the person can still make informed decisions, a POA provides flexibility and control. However, if the individual is already incapacitated, guardianship may be necessary to ensure their well-being and protect their assets. Consulting with an attorney can help families navigate these complex decisions and find the best option for their loved one.

As always, navigating legal matters can be complex and requires the guidance of competent legal counsel to protect your rights and interests. Don't leave important matters to chance—retain reliable legal counsel to guide you every step of the way!