As an estate attorney, I often advise clients on the importance of creating a financial power of attorney as part of their estate plan. A financial power of attorney is a legal document that designates a trusted person (the agent) to manage your financial affairs in the event that you become incapacitated and are unable to make financial decisions for yourself. In this blog post, I will explain how a good financial power of attorney can avoid the need for a guardianship process.
What is a Guardianship?
A guardianship is a legal process in which a court appoints a person (the guardian) to make decisions for an incapacitated individual (the ward). The guardian has legal authority to manage the ward’s finances, make medical decisions, and other decisions that the ward is unable to make for themselves.
Guardianship can be a necessary tool to protect vulnerable individuals who are unable to make decisions for themselves. However, the guardianship process can be time-consuming, expensive, and can limit the ward’s independence and autonomy.
How Can a Financial Power of Attorney Avoid Guardianship?
A financial power of attorney can avoid the need for a guardianship by designating a trusted person (the agent) to manage your finances in the event of your incapacity. If you become incapacitated and are unable to make financial decisions for yourself, your agent can step in and make decisions on your behalf. This can include paying bills, managing investments, and other financial tasks that you would normally handle yourself.
Here are five ways in which a good financial power of attorney can help avoid the need for a guardianship:
Avoiding Court Involvement: A guardianship requires court involvement, which means that a judge must appoint a guardian to manage the ward’s affairs. This can be a time-consuming and expensive process. A financial power of attorney, on the other hand, does not require court involvement. The agent can immediately step in and manage the ward’s finances without waiting for court approval.
Preventing Family Conflicts: Guardianship can sometimes lead to family conflicts. Family members may disagree about who should be appointed as the guardian or how the ward’s finances should be managed. A financial power of attorney can help prevent these conflicts by designating a specific person to manage the ward’s finances. This can provide clarity and reduce the likelihood of disputes among family members.
Providing for Immediate Assistance: Guardianship can take time to set up, and during that time, the ward’s financial affairs may go unmanaged. A financial power of attorney can provide immediate assistance in the event of an incapacity. The agent can step in and manage the ward’s finances without delay, ensuring that bills are paid, investments are managed, and other financial tasks are completed.
Maintaining Independence: Guardianship can limit the ward’s independence and autonomy. The guardian may have broad authority to make decisions for the ward, which can be restrictive and intrusive. A financial power of attorney, on the other hand, can be tailored to the ward’s specific needs and preferences. The agent can be given only the authority necessary to manage the ward’s finances, while still allowing the ward to make other decisions for themselves.
Reducing Costs: Guardianship can be expensive, especially if it is contested or involves a lengthy court process. A financial power of attorney, on the other hand, is typically less expensive and can be established with the help of an estate attorney. By avoiding guardianship, the ward and their family can save money on legal fees and other expenses.
A good financial power of attorney is an important tool that can help avoid the need for guardianship. It allows a trusted person to manage your finances in the event of your incapacity, without the need for court involvement or family disputes. Don’t hesitate to reach out if there’s anything we can do to help.
