If you don’t have a comprehensive power of attorney, you cannot make health care decisions or handle the financial affairs of your loved ones without the intervention of the court (guardianship and conservatorship). The most unfortunate thing is that most individuals, including accountants, financial advisors, and even a few attorneys do not understand the meaning of a power of attorney and why you need one. Let no one cheat you that because you are a couple or own assets jointly, you will be able to transfer or sell the assets. For instance, you cannot sell your fathers car if he has not signed the durable power of attorney.
A power of attorney is a legit document that allows the principal to authorize an agent to act on his or her behalf. There are healthcare powers of attorney that will enable the agent to make decisions that regard the healthcare needs of the principal and durable powers of attorney that allow him to make financial decisions.
You can have a power of attorney that has a broad scope and gives the agent to make all forms of financial decisions on your behalf (General Durable power of attorney) or you can decide to limit the authority of agents by specifying the kind of financial decisions that you allow them to make (Limited Durable Power of Attorney). Some people prefer to give the agent immediate authority to make for them decisions (Durable Power of attorney) or limit the authority of the agent to act only when you are incompetent (Springing Power of Attorney).
Conservatorship and Guardianship
The term guardianship refers to the legal relationship that sees the court give an individual (guardian) the authority of making personal decisions (housing, medical, etc.) for another person (the ward). You file a petition in the probate court to initiate a proceeding. A doctor may have to prepare a written statement indicating the incapacity of the ward. The court will determine whether there is a need for a guardian because the ward does not have the necessary mental capacity of making personal decisions. The guardian has similar rights as the ones parents have over the minor children unless the court limits him. The guardian has to report to the court every year concerning the ward’s condition.
A conservator is a legal relationship in which the probate court gives an individual (conservator) the power of making financial decisions for another person. The proceedings of the court are similar to guardianship only that the court will be determining if the individual has the capacity of managing his financial affairs. The conservator should also file yearly accounting documents together with the verification of all the expenses and income that were incurred during the year. The conservator will have to provide an insurance policy as a surety bond as protection so that he does not engage in improperly using the assets of the individual.
A power of attorney has preference over a conservator or guardian. It will not cost you so much because you will have to choose the preferred agent. If you don’t possess a power of attorney and you get a debilitating disease or stroke, your family members may face time-consuming and expensive court proceedings to handle your affairs.