Business Durable Power of Attorney vs. Guardianship

What is a Power of Attorney (POA)?

A Power of Attorney is a multi-page legal document that allows you - the creator of the POA who is also called the Principal - to appoint another person - your agent or attorney-in-fact - to make personal and/or financial decisions for you.

How do I create a POA?

Once a document is drafted, you must sign it before a witness and a notary.  In order for the POA to be valid, you must be mentally competent to sign this or other legal documents.

There are two types of POAs

• For general business matters
• For healthcare matters

Each allows you to name another person to make decisions for you (business or medical) in the event that you are ever unable to make decisions for yourself.

Who should I select as my agent?

• A family member
• Spouse, child, sibling, niece or nephew
• Pick someone you know to be trustworthy and well organized

The healthcare POA is effective anytime you can't make healthcare decisions for yourself.  A living will is only effective when death is imminent.

Do I need both documents?

Yes, because the two documents are effective at different times and they do different things.

Some typical situations where you might need a POA

• Situations such as a mild stroke, an auto accident, Alzheimer's disease are common causes why you would become unable to  handle your business affairs or make business decisions such as writing checks, depositing and withdrawing from your bank account, filing tax returns, handling property, signing important documents.

What could happen if I don't have a POA?

Without a Durable POA a family member, or someone else, must ask a Court to appoint someone to be the guardian of your property and to make you a ward of the Court.  If the Court becomes involved, you may lose control over your business affairs because even though the Court means well, the Court does not know you, who you trust, or how you may want your affairs handled. 

The Court may appoint someone in your family, or they may appoint a local attorney who does not know you.  You may have no say in who the Court appoints, or how the Court handles your case.

If the Court becomes involved, it can be very expensive if the Court needs to appoint several attorneys, social workers, or other professionals to become involved in your case.  All of their fees may be paid from your assets.  For these reasons, you do not want the Court involved, except as a very last resort.

 

The information presented in this site should not be construed to be formal legal advice nor the formation of a lawyer/client relationship.