The Role and Importance of Power of Attorney Agents

To the average person, there may not seem to be much of a difference between an agent under a power of attorney and a court-appointed guardian, since both are third parties that could be authorized to handle financial and legal decision making for a person who lacks capacity to do so. However, there are significant differences between the two fiduciaries and the way in which they are given authority.

Power of Attorney

A Durable Power of Attorney is an important estate planning document that allows you, as the principal, to appoint an agent(s), and authorizes your agent(s) to act on your behalf with regard to your financial affairs.

Your agent is a fiduciary and as such owes you a duty of loyalty, honesty, and must account for their actions when requested. The agent must also follow your directions when acting. If you are not able to provide directions, then the agent must act in your best interest.

The agent(s) authority exists while you have legal capacity, and continues should you lose legal capacity to make your own decisions. Also, you have the ability to revoke the Durable Power of Attorney at any time as long as you are competent to do so.

Guardianship

Although there are two types of guardianship proceedings for adults in New York State, the most relevant for this discussion is the Mental Hygiene Law Article 81 guardianship, as it pertains to adults who had capacity at one point, but due to a loss of functionality, now need the assistance of a guardian. This guardianship proceeding is typically brought against someone who failed to execute a Durable Power of Attorney and/or Health Care directives when he or she had the legal capacity to do so, and now lacks capacity to make a handle their own affairs (personal or financial).

If the court proceeding is successful and the court appoints a guardian, it will provide a detailed list of the actions the guardian is authorized (and not authorized) to take on behalf of the incapacitated person.

Guardianships are court proceedings and can be extremely time consuming, expensive, and may cause unnecessary stress on the family.

The most significant differences between a guardianship and a Durable Power of Attorney are the following:

• Control – With a Durable Power of Attorney, you control who is your agent and what level of authority the agent has over your affairs. You can select anyone to be your agent(s) – a family member, friend, or trusted professional. With guardianship proceeding, the judge chooses who is appointed your guardian and what level of authority the guardian has over your affairs. Although judges will take your family and personal relationships into consideration when selecting a guardian, it is common for judges to appoint independent professionals, such as attorneys, as guardians. This means that a complete stranger could be in charge of your affairs.
• Cost – Another significant difference is the cost involved. A guardianship proceeding can be extremely costly, whereas a Durable Power of Attorney is a fraction of the cost of a guardianship proceeding. Also, the guardianship proceeding usually takes several months to complete and have someone appointed, and can be extremely stressful.
• Oversight – Generally there is no court oversight of an agent under a Durable Power of Attorney, whereas there is significant oversight for a guardian appointed. This can add to the expense involved in guardianship and time involved to take action.

In summary, there are significant differences in the Durable Power of Attorney and a guardianship proceeding, with the former being the preferred option.