A legal guardianship can be granted when an adult becomes unable to handle his or her own affairs. To prevent a legal guardianship, you could use a certain type of power of attorney.
Before we narrow our our focus on this dynamic, we should provide some general information about powers of attorney.
Empowering a Representative
There are circumstances that can exist that would call for the appointment of a representative to act on behalf of another person in a legally binding manner. The document that would be used to appoint someone to act on your behalf is called a power of attorney.
When you examine the anatomy of a power of attorney, you have the grantor or principal. This is the person who is granting the power. The individual who is given the power to act on behalf of the grantor is called the agent or attorney-in-fact.
Because the agent is alternately referred to as an attorney-in-fact, a misconception can arise. Since the name of the device includes the word “attorney,” and the representative is called the attorney-in-fact, you may assume that the agent must be a licensed attorney. In fact, this is not the case.
Any competent adult who is willing to assume the role can act as an agent under a power of attorney. However, if you are going to create a power of attorney, you should make sure that the person that you name as the agent is willing to take on the responsibility. No one can be forced to serve as an agent under a power of attorney.
General Power of Attorney
There are different types of powers of attorney. One variety is the general power of attorney. If you were to execute a general power of attorney, you would be giving the agent the power to act on your behalf in a comprehensive manner. In essence, the agent could do just about anything you could do for yourself.
This can be a disturbing level of control to give to someone else. However, sometimes a general power of attorney is necessary, because the person granting the power needs this level of assistance. Clearly, you must be very discerning with regard to the choice of an agent if you are granting a general power of attorney.
Limited Power of Attorney
If you do not want to grant sweeping powers to the agent, you could execute a limited power of attorney. As the name would indicate, you give the agent the power to act on your behalf on a limited manner when you create this legal device.
Why would you use a limited power of attorney? For example, you may grant a limited power of attorney to a trusted associate who can enter into certain types of business transactions on your behalf, because you cannot be everywhere at once.
It would also be possible to limit the power to a particular period of time. Let’s say that you are going to be conducting business in Singapore for a month. You are the president of your company. It would be possible to allow a senior executive to act on your behalf for business purposes while you are in Singapore.
Legal Guardianship and Durable Powers of Attorney
Now that we have provided the necessary foundation, we can look at legal guardianship and powers of attorney.
Every estate plan should include an incapacity component. A significant percentage of seniors become unable to make sound decisions on their own at some point in time, and you could use a durable power of attorney to appoint someone to act on your behalf in the event of your incapacitation.
The “durable” designation a significant, because a power of attorney that is not durable would no longer be in effect if the grantor was to become incapacitated.
With regard to the term “significant percentage,” you should understand the fact that 45 percent of people who are at least 85 are suffering from Alzheimer’s disease. Of course, there are other causes of incapacity, so this is a possibility that everyone should prepare for in advance.
The state could appoint a guardian to manage your affairs if you do nothing to prepare for possible incapacity, so you prevent a legal guardianship when you create a durable power of attorney. A hand-picked decision-maker would be standing at the ready to act on your behalf if you were to become unable to handle your own affairs at some point in time, and there would be no need for the state to appoint a guardian.
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Alan Augulis, Estate Planning Attorney
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