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    January 2013
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    Why Resolve to Get a Power of Attorney This January?

    Ed Olkovich

    Power of attorney v. court appointed guardians

    Making a power of attorney (POA) is simple. If you fail to sign power of attorney it is, sadly, a darker story. Without a POA, no one can manage your affairs if you are suddenly unable. You face going through the costly guardianship process which powers of attorney can easily avoid.

    Here are key differences between powers of attorney and guardianship.

    Powers of attorney can be straightforward documents you sign. There are few requirements to make these documents legal.

    • You choose or name an attorney in the document to act as your agent.
    • Attorneys act on your instructions or restrictions in the document you sign.
    • The attorney or agent will be your substitute decision-maker.

    Usually you must sign the POA in front of two qualified persons as witnesses.

    Types of powers of attorney

    Powers of attorney come in many different types.

    A simple banking POA allows someone to handle a bank or investment account. A simple POA could allow someone to sign legal papers for you. Typically, these are used to sell stocks or sell a house while you were on vacation.

    POAs can also specifically cover property or health and personal care decisions. These POAs can specify an attorney may continue to act even after you are incapacitated. You can become incapable at any age due to an accident or illness.

    POAs are often referred to as an enduring or continuing POA. This means the attorney can act even if you no longer can act independently.

    The trick with a POA is it must be signed before you become incapable. Get it before you need it.

    The person signing the POA must be legally capable of giving a power of attorney. In law, this is called having capacity.

    Key features of a power of attorney:

    • the document can be revoked or canceled
    • the document can set restrictions on the attorney
    • compensation for the attorney can be specified
    • your specific wishes or standards can be detailed
    • authority can be given to sell your assets
    • the attorney cannot change your will
    • the attorney can continue if you become incapable as grantor

    Guardians are Different from POAs

    Guardians must be appointed by a court. They are selected when you have no power of attorney. Your next of kin or friends must apply in court to be appointed a guardian for property. You will also need a guardian to make personal care or health decisions.

    Your court appointed guardians will need to:

    • hire estate lawyers to prepare court papers
    • advise the government of your incapacity
    • pay for medical assessments
    • prepare detailed management plans to deal with your property
    • file guardianship plans for your care and personal care decisions
    • purchase a bond to ensure your assets do not disappear
    • consult with your family members who can object to the application

    Court Appointed Guardians need permission from the court to:

    • keep you in your home with care givers
    • sell your home to place you in a nursing home
    • decide where you are to live
    • make decisions about your health care
    • decide to spend or invest your money

    Advantages of a POA

    1. You can avoid a court investigating your financial and personal health.
    2. The POA offers privacy, less costly procedures and greater flexibility.
    3. POAs allow your attorney to make decisions as circumstances require.

    Having a lawyer prepare a POA can cost a few hundred dollars. Having a lawyer prepare a court application for a guardianship will cost tens of thousands of dollars.

    Conclusion

    Your estate plan should include POAs for property and personal care. Resolve to make or update your POA in January.

    See my related blog posts and free guide

    About Edward Olkovich

    Edward Olkovich (BA, LLB, TEP, C.S.) is a nationally recognized author and estate expert. He is a Toronto estate lawyer and Certified Specialist in Estates and Trusts. Edward has practiced law since 1978 and is the author of Executor Kung Fu. Visit his website, mrwills.com, for more free valuable information.

    © Edward Olkovich 2012

    The MONEY® Network