Elder Law Update – At Large Edition June 2009 Vol I

Special White Paper Report

Power of Attorney versus Guardianship

Quite often we discover that clients coming to our office do not know the difference between a power of attorney and guardianship.  I would like to take the opportunity to explain it to you in very basic terms.

What is a Power of Attorney?  A power of attorney is a legal document where one person, the principal, gives legal authority to another person, the agent, to perform certain acts on the principal’s behalf.

There are 2 types of POAs:

  1. Financial
  2. Health Care

 

In many instances, people will rely on the Illinois Statutory Short Form Power of Attorney for Property for financial matters, and the Illinois Statutory Power of Attorney for Health Care for medical needs.  Contrary to their names, these powers of attorney are not that short.  Nevertheless, depending on the needs of our clients, we often expand these documents even further to include certain provisions that the standard short form does not provide. 

It may be a good idea in many circumstances to use the statutory forms because they are easily recognized by health care providers and financial institutions as powers of attorney.  You do not have to use the statutory form and can create your own power of attorney as long as it meets the requirements of the law.  However, once you depart from the statutory forms, you start running the risk that the document that you created may no longer be recognizable or accepted by health care providers or financial institutions. 

You also have the ability to strike out and reduce the powers that are listed in the statutory forms.  Quite often, clients don’t want to give all of the powers that the statutory form automatically provides. 

Finally, with regard to powers of attorney you can make them immediate powers of attorney or what we call “springing” powers of attorney.  An immediate power of attorney takes effect the day you sign it and can remain in effect for as long as you wish.  A springing power would only come into effect on the triggering of an event, such as a doctor’s determination of your disability.  You could allow powers of attorney to remain in effect for the remainder of your life often referred to as a durable power of attorney, or you can make a power of attorney last for only a short period of time, for example two weeks in order to allow an agent to close a real estate transaction for you.  For estate planning and long-term care planning, a durable power of attorney is obviously more effective.

What is Guardianship?  Guardianship is a court-established legal relationship whereby the Guardianship Court appoints a person, the Guardian to make personal and financial decisions for someone who cannot make these decisions on their own (the Ward). 

In Illinois, we have several forms of guardianship, but the most common is considered to be guardianship of the person for personal decisions regarding personal care and living arrangements.  The second type of guardianship is guardianship of the estate, wherein the Guardian has control over the assets of the Ward.

Quite often a family member or interested person may initiate the guardianship proceeding by filing a Petition in the Guardianship Court in the county where the Ward resides.  The opinion of a doctor is necessary to establish the disability of the individual.  If the Ward is properly served and examined by a guardian ad litem (a court appointed lawyer acting as the eyes and ears of the judge), then the court may appoint a Guardian to make decisions in either the personal area or the financial area or both.  The power that a Guardian has is however, closely scrutinized by the court; before a Guardian can take any actions other than routine day to day matters, a court order must be obtained.  A Guardian is also required to report at least annually to the court on the status of the Wards personal condition and the status of the Wards income and assets.

Conclusion

For Long-Term Care Planning purposes, we like to have powers of attorney in place so guardianship can be avoided.  Guardianship will have substantial costs associated with it.  However, in many cases either because the power of attorney is inadequate or non-existent, guardianship is often obtained in order to further advance the benefits to the ward.

This is another example of the need for proper planning so you have the opportunity to avoid a costly guardianship proceeding and instead rely on your self-appointed agent under powers of attorney to act the way you instruct them to act in the event of your disability. 

If you have any questions, please do not hesitate to contact us.

Long Term Care Planning Attorneys

The “3 Phase” Lawyers

 

Legal Counsel Assisting You in the 3 Phases of Your Life:

 

–           Maturing Years – Will, Trust, Taxes, and Asset Protection

–           Senior Years – Long Term Care and Nursing Home Protection

–           Post Death Years – Estate, Probate, and Trust Administration

 

 

“Educate to Motivate”

 

Anthony B. Ferraro

Attorney-CPA

The Law Offices of Anthony B. Ferraro, LLC

The Estate & Trust, Elder and Asset Protection Law Firm

Columbia Centre I

5600 N. River Road, Suite 764 

Rosemont, IL 60018 

PH (847) 292-1220

FAX (847) 292-1221

Websiteabferrarolaw.com

Emailabferraro@abferrarolaw.com

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