What Is the Difference Between Power of Attorney & Guardianship?

A power of attorney is a step toward planning your future, should you become incapacitated to the point where you cannot tend to your own affairs. A guardianship generally comes about because your are already incapacitated and you didn’t prepare for it. The former is voluntary on your part; the latter may happen against your will.

A power of attorney is a document you draw up yourself. It doesn’t have to follow any exact format, although some states may require notarization. You use one to give another individual as much or as little power as you like to make health care decisions for you or to take care of your personal business when you can’t. A guardian performs the same duties, but a judge appoints him. A guardianship document is a court-issued order. A power of attorney is your own order, and you can invalidate it with another document, a revocation, if you so choose.

You don’t have to file your power of attorney with the court; the court doesn’t even have to know about it. After you draw it up, you give a copy to the individual you’re granting the power to, as well as to any financial institutions or doctors he might have to interact with on your behalf. A guardianship begins when someone petitions the court to let it know that you’ve become incapable of taking care of yourself and your own affairs. The court will intervene, have you examined by a medical professional to determine if this is so, and appoint someone as caretaker of you and your affairs. Your guardian must give the court reports on your welfare and status updates on your finances, usually once a year.

Your power of attorney can be either general or limited. As the name implies, a limited POA only allows your agent or attorney-in-fact, the person you’ve appointed, to do certain things. It can be “springing,” designed to go into effect when you can no longer take care of things yourself, or “durable,” allowing your attorney-in-fact to act on your behalf both now and in the future, should you become incapacitated. Guardianships are personal or financial, but a court generally will not appoint two guardians, one to take care of each. The same individual usually serves in both capacities.

By law, you can’t create a power of attorney if you’re not mentally competent to do so. The court would have to appoint a guardian for you instead, and you would not necessarily have a say in who a judge chooses.

Because powers of attorney are not court orders, not all institutions will honor them. This might prompt a guardianship proceeding if you’re incapable of taking care of things yourself, and your bank won’t recognize the plan you put in place to have someone else do it for you. Check with your financial institutions ahead of time, when you’re creating your POA. You might want to change your bank or investment firm to one that will accept it.