Powers of Attorney v Guardianships

Estate Planning Practice Group

By Estate Planning Practice Group

When your child turns 18 years old, he or she is considered a legal adult. As an 18-year-old, he or she has the ability to contract, to make decisions such as whether he or she wants to continue to go to school, and whether a parent can be present in an IEP meeting. Further, because of HIPAA privacy rules, a doctor can no longer communicate with the parent regarding that child’s health issues. For families with a child who has special needs, they must make some critical decisions in order to protect their child who is turning eighteen. Two options for these families are seeking guardianship through the court or having the child sign a power of attorney, if appropriate.

Guardianships are a process through the court by which persons are declared incapacitated to the extent that they are unable to make their own decisions regarding medical care and placement, and an individual is appointed by the court to act in their stead. Since the court regulates the guardian, this process can become a costly affair and is a much longer undertaking than a power of attorney, especially if the appointment of a particular guardian is contested.

Conservatorships are formed whenever persons are declared unable to handle their own assets. If a guardianship is granted, a conservatorship will also typically be granted. If the person who was declared incompetent by the court has assets, the court will monitor the appointed conservator and will require annual reports regarding the use of the assets by the conservator to be filed by an attorney.  In order for a guardianship or conservatorship to be set aside, the incapacitated person must petition the court to have his or her legal rights restored and must demonstrate the previously incapacitated person is no longer in need of a guardian or conservator.

A power of attorney, on the other hand, is a legal document created by an individual of sound mind to grant certain powers to their agent. The grantor of the power of attorney tailors his or her needs within this document to deal with specific financial issues or medical decisions. Additionally, the grantor can choose whether the powers take effect upon the signing of the document or at some future date.

One of the most frequently asked questions regarding guardianships is when should the guardianship process be started. The process seems to run the most smoothly whenever it is initiated three months before the child who is in need of a guardian turns eighteen. This allows time for the child’s physician or psychiatrist to complete the necessary paperwork that must be submitted to the court. The physician must be recommending that the child is in need of a guardian and unable to make the necessary daily decisions to function without a guardian. If after the evaluation, a physician or psychiatrist does not feel that a guardianship is necessary, then execution of powers of attorney may be appropriate.

Whether a guardianship is appropriate or execution of a power of attorney is possible, a family should explore both options.

Competency Level Required to Execute a Power of Attorney

When should a Power of Attorney be applied?

Powers of attorney often address two distinct areas: healthcare and financial decisions. Financial powers of attorney may either be immediately effective or come into effect if the person who signed the document is no longer able to make decisions for himself or herself. Healthcare powers of attorney only become effective whenever a physician certifies that the person who granted the power is no longer able to make healthcare decisions for himself or herself.

In order for someone to sign a power of attorney, he or she must be at least 18 years of age and able to understand the nature of the document he or she is signing.

Durable Power of Attorney

All powers of attorney should be made durable, or to remain in effect after the incapacity of the principal, unless the purpose of the document is for the agent to act for specific limited transactions. In order to enforce a power of attorney document, in essence a contract, the principal must be competent at the time the document is signed. While there is no clear dividing line between the competency and incompetency level, cases have repeatedly stated the principal must have a sufficient mental capacity to appreciate the effects of what they are agreeing to within the contract.

Revocation of Power of Attorney

It is important to understand that powers of attorney may be revoked at any time by the person who signed the document. Therefore, if an adult child does not agree with a decision that the attorney-in-fact has made, he or she may revoke the power of attorney making the document ineffective. There are many benefits of the powers of attorney because the court is not involved in the process and the documents are relatively inexpensive to have prepared by counsel; however, they are not appropriate in all cases.

Physical Conditions

An individual possessing a debilitating physical impairment which does not adversely affect their mental competency can still validly enter into a contract. Courts have stated that the physical condition of the principal is immaterial as to whether the contract is valid. Neither age, sickness, extreme distress, nor debility of body will affect the capacity to make a contract if sufficient intelligence remains to understand the transaction.

Mental Conditions

Similar to physical impairments, mental conditions due to disease does not immediately deprive an individual of the capacity to dispose of his or her property by contract until their mental illness has progressed to the point where intelligence has been lost. In other words, a person may still be capable of contracting despite such a condition as eccentricity, or old age.

Evaluating Mental Capacity at Time of Transaction

Mental capacity must be assessed at the time of the transaction, although a party’s capacity before or after the execution of a contract is the critical period of time to be considered in the inquiry as to whether the individual has met the mental capacity requirement. Hence, a contract is binding if it is entered into in a lucid interval of a person with some form of dementia. On the other hand, a contract entered into by one who is temporarily insane may be avoided.

If a person has Alzheimer’s disease or other similar dementia, this disease does not immediately render him or her wholly incompetent, and instead, it must be demonstrated that, because of the affliction, the individual was in fact incompetent at the time of the challenged transaction.


For an individual to execute a power of attorney, they must possess a sufficient capacity to understand the contract they are entering into. Further, powers of attorney are at all times revocable, unlike a guardianship. Nevertheless, a power of attorney can be a great resource for some individuals who have turned 18, so that family members can act on their behalf.

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