Power of Attorney (POA), Conservatorship, & Guardianship. Understanding the Difference between them.
Things You Can and Can’t Do With Power of Attorney (POA)
Like most legal undertakings, setting up and enforcing power of attorney (POA) documents can be a confusing process. Yet, these essential tools can help aging adults and their families create a solid plan to address future care needs and gain peace of mind.
The Two Types of POA. POA documents allow a person (the principal) to decide in advance whom they trust and want to act on their behalf should they become incapable of making decisions for themselves. The person who acts on behalf of the principal is called the agent.
From there, it is important to distinguish between the two main types of Power Of Attorney: medical and financial.
A medical Power of Attorney (also known as healthcare POA) gives a trustworthy friend or family member (the agent) the ability to make decisions about the care the principal receives if they are incapacitated. A financial POA gives an agent the ability to make financial decisions on behalf of the principal. It is common to appoint one person to act as an agent for both financial and healthcare decisions, but in some cases it may be wise to separate the two.
What Can a POA Do? The powers of an appointed agent can be broad or narrow, depending on how the POA document is written. Here are a few examples of the kinds of decisions an agent can make with each type of POA.
- A healthcare agent can decide:
- What medical care the principal receives, including hospital care, surgery, psychiatric treatment, home health care, etc. (These choices are dependent on the financial means of the principal and the approval of their financial agent.)
- Which doctors and care providers the principal uses.
- Where the principal lives. This includes decisions regarding residential long-term care, such as assisted living, memory care and nursing homes. Again, the principal must be able to afford their living arrangements and the financial POA must approve these costs.
- What the principal eats.
- Who bathes the principal.
- A financial agent can:
- Access the principal’s financial accounts to pay for health care, housing needs and other bills.
- File taxes on behalf of the principal.
- Make investment decisions on behalf of the principal.
- Collect the principal’s debts.
- Manage the principal’s property.
- Apply for public benefits for the principal, such as Medicaid, veterans benefits, etc.
- What Can’t a POA Do?
- A generic POA document that does not contain any limitations typically gives an agent broad power over medical or financial decisions. However, there are still a few things that an agent cannot do. One of the
- fundamental rules governing an agent’s power is that they are expected to act in their principal’s best interest.
A Power of Attorneyagent cannot: Change a principal’s will. Break their fiduciary duty to act in the principal’s best interest.
Make decisions on behalf of the principal after their death. (Unless the principal has also named the agent as the executor of their will or the principal dies without a will and the agent then petitions to become administrator of their estate.)
Change or transfer POA to someone else. An agent has the right to decline their appointment at any time. However, unless the principal named a co-agent or alternate agent in the same POA document or is still competent to appoint someone else to act on their behalf, an agent cannot choose who takes over their duties.
The Uniform Power of Attorney Act. Each state has statutes that govern how power of attorney documents are written and interpreted. This can complicate matters when a principal decides what powers to give to their agent and an agent tries to determine what actions are legally within their power.
For this reason, all states have begun adopting the Uniform Power of Attorney Act (UPOAA). Created in 2006 by the Uniform Law Commission, this law aims to create universal default rules for POA contracts across states. It determines which powers are included in the document by default and which must be explicitly addressed in order to be bestowed on an agent.
Among other things, the UPOAA mandates that: A POA is valid and durable as soon as it’s signed. According to geriatric care manager and certified elder law attorney, Buckley Anne Kuhn-Fricker, JD, this provision is important because it gives a principal the flexibility to decide how involved they want their agent to be while they are still in possession of their faculties. For example, a financial agent could handle the day-to-day tasks of paying bills and buying food, while the principal continues to make their own investment and major purchasing decisions.
Compensation for decision-makers, gift-giving and any beneficiary changes must be specifically outlined in the POA document. One common question people have about POA documents is whether an agent can receive compensation for making decisions on behalf of a loved one. Fricker says that any compensation must be clearly outlined in the document before it is executed for payment to be legal. She advises older adults who are considering appointing someone as their agent to think about including a provision that allows that person to be paid for their services. “Offering to pay a chosen POA is a way to incentivize them to take the extra time and care necessary to literally manage another human being’s affairs,” she says. The time and effort that an agent must invest to make decisions for another person can easily overshadow an agent’s own responsibilities and affairs.
Third parties, such as banks, doctors and other family members, cannot be held accountable for upholding the decisions of an agent with a POA document that appears to be legitimate.
A POA designation ends upon the death of the principal.
According to the Uniform Law Commission, as of 2019, a total of 26 states have enacted versions of the Uniform Power of Attorney Act, including Alabama, Arkansas, Colorado, Connecticut, Georgia, Hawaii, Idaho, Iowa, Maine, Maryland, Montana, Nebraska, Nevada, New Hampshire, New Mexico, North Carolina, Ohio, Pennsylvania, South Carolina, Texas, Utah, Virginia, Washington, West Virginia, Wisconsin and Wyoming. Adoption of this legislation is pending in the District of Columbia, Massachusetts, Mississippi and Tennessee.
Because all 50 states have not yet enacted this precedent for POA documents, it is always best to err on the side of caution. A reputable elder law attorney can discuss your desires and concerns and devise POA documents that clearly explain the extent of power you want your agent(s) to have and any limitations they must abide by. Things You Can and Can’t Do With Power of Attorney-Anne-Marie Botek
Conservatorship. A conservator is an individual or corporation appointed by a court to manage the estate, property, and/or other business affairs of an individual whom the court has determined is unable to do so for himself or herself. The individual who is being protected is called the “protected person.”
Guardianship. Guardianship provides for the care of someone who is not able to care for himself or herself. The court may appoint a guardian if there is clear and convincing evidence that the person is incapacitated and that he or she requires continuing care or supervision. The individual who is being watched over on behalf of the court through the guardian is called the “ward.”
Conservatorship has to do with the management of things that the ward or protected person owns or has had control over. Guardianship has to do with the management of the life actions and needs of the ward or protected person. In many states, guardianship and conservatorship are all wrapped together under one responsibility. In other states, these two responsibilities are clearly delineated. In addition, some states are quite specific about various types of court-appointed representatives such as executors of wills and licensed fiduciaries who may, in some states, play the same role as a conservator. Each state has its own rules and procedures and may not even use names such as guardianship or conservatorship. Those states that have adopted the Uniform Probate Code in its entirety use the definitions and functions as outlined above. Other states that have adopted portions of the unified code may recognize the two functions of conservatorship and guardianship or they may not.
Another concept used in certain states is the “representative payee.” This is an arrangement that is less all-inclusive than a conservator in overseeing the financial obligations of a protected person. The representative payee may only be given certain rights for using income from the protected person to manage the bank account and to pay bills. Other rights over the property of the protected person may not be extended to a representative payee.
Guardians, conservators or other fiduciary agents acting on behalf of an incapacitated person or someone who is dead, can be nominated by a will or other document or by involved financial institutions or by trusted family members. The court will ultimately appoint whomever it feels is the best qualified person or persons.
Sometimes, families or individual children are too eager to pursue guardianship or conservator-ship or other arrangements without consideration of the consequences. For example, it is common for family members to disagree as to the degree of incantation of a loved one. An individual family member going against the wishes of the others in the family and petitioning the court may create great tension and dispute within the family. Sometimes, a child or other close relative is only interested in his or her personal gain by being a guardian or conservator. The needs of the person being protected or the needs of other family members are disregarded. Finally, a family in dispute, seeking a guardianship or conservator-ship from the court, can cause severe infighting among family members as well as permanent rifts in communication and future relationships. Brought to you by Scott Underwood “The Reverse Mortgage Guy” and my friends at the National Care Planning Council. Brought to you by Scott Underwood “Alabama’s Reverse Mortgage Guy”. Please call if one of these might be needed to pursue a Reverse Mortgage. We make old fashioned house calls to the greater Huntsville area and also Gadsden, Anniston, and Fort Payne.