Which One Do You Need?
What can you do when your close relative can no longer manage their own affairs? Your relative might have had a stroke or have developed Alzheimer’s disease, for example. These are just a few reasons a person might be unable to pay bills, cash checks, and make critical decisions.
If the sick person can still make some decisions and communicate, it might be possible for him to appoint a person to handle his affairs. This process is usually done by signing a power of attorney.
However, guardianship may be necessary if the sick person can no longer understand and make decisions. Sometimes it is difficult to figure out if your relative is still well enough to understand and sign a power of attorney. You or your relative can speak with a lawyer to decide which approach — guardianship or power of attorney — would be best. Your relative’s doctor may be able to determine if he is well enough to sign legal papers.
Guardianship
Guardianship is a legal procedure in which a court appoints a person to make decisions for someone who can no longer decide for himself.
There are two types of guardians:
- A “guardian of the person” is appointed when people cannot care for their own personal needs, such as medical care.
- A “guardian of the estate” is appointed if people cannot handle their own business or financial affairs. A “general guardian” is someone who acts in both roles.
A person will be declared incompetent and in need of a guardian if he lacks sufficient capacity to manage his own affairs or to make or communicate important decisions about his health, property, or family.
Filing a Guardianship
Usually, you do not need a lawyer to ask to be appointed someone’s guardian. The forms to file a guardianship case are easy to fill out and can be obtained from your local courthouse. Most courts will require that you get a letter from a doctor explaining why the doctor feels that the person is incompetent.
Appointing a Lawyer
If the incompetent person does not have a lawyer, the court will appoint a lawyer to represent the incompetent person at the hearing. This temporary representative is called a “guardian ad litem.” The incompetent person also has a right to have a personal lawyer present at the hearing. During the proceedings, there may be a request for a jury trial or competency evaluation.
Estate Guardian
If you are appointed a general guardian or a guardian of the estate, you will need court permission for many financial transactions on the incompetent person’s behalf. An estate guardian must carefully manage the incompetent person’s business and financial affairs. The guardian must give a report each year of the receipts, payments, and other transactions made that year.
Guardianship or Power of Attorney
If a person can still understand legal documents, signing a power of attorney may be preferable to guardianship. For this reason, a power of attorney allows the person to choose who will handle their affairs instead of having the court make this choice. To clarify, a power of attorney is handled out of court and requires no court supervision.
Power of Attorney
A power of attorney is beneficial for those needing someone to handle their financial affairs. A mentally competent person must sign the paperwork, as the person must understand what he is signing—designating a person before losing mental capacity. Or, if this has already happened, during a period that the person has regained ability, if only temporarily. A doctor could help determine capacity if there is doubt.
Medical Determination
If a power of attorney is signed by a person whose competency “comes and goes,” it is essential to have a written medical determination of competency when the documents are signed. Under those circumstances, a medical opinion is also helpful where the person has a progressive disease — one that gets worse, like Alzheimer’s — in case someone later questions whether a power of attorney is valid.
Durable Power of Attorney
The most helpful type of power of attorney is the durable power of attorney. Unless a power of attorney is durable, the agent loses any authority to act if the maker becomes incompetent. For most, that is precisely when the agent’s assistance is necessary. A power of attorney can be made durable with explicit language stating that it remains effective after the maker becomes incompetent.
Trust in the Agent Is Critical
The person who receives a power of attorney is known as the agent. Trust in the agent is crucial. The agent can write the maker’s checks, sell the maker’s property, and incur debt in the maker’s name. Sometimes, an incapacitated person just needs someone to take care of a Social Security check. In this case, contact the Social Security Administration to see if you can become the representative payee. The Social Security Administration approves this person to receive the check and spend it for the incapacitated person.
Health Care Power of Attorney
A health care power of attorney is helpful if your loved one needs someone to make medical and health care decisions. To summarize, your loved one can sign this document if he is mentally competent or when he is mentally alert.
In the final analysis, the health care power of attorney goes into effect when a person cannot make and understand medical decisions. At that time, the person named in the health care power of attorney, the “agent,” can make all medical decisions (or only those listed in the health care power of attorney). The health care agent cannot make any decisions related to property or bills.