Tuesday, February 21, 2017

Power of Attorney, Guardian, Conservator, Personal Representative...What's the Difference?

When someone becomes sick, a relative often handles their affairs for them. But there are different titles or roles that the caretaker can be acting under while managing the affairs. There are differences between the roles, but people often do not realize this.

Power of Attorney

A power of attorney (POA) is a document signed by an individual allowing another individual to manage a predefined set of affairs. The powers of the person acting as POA are limited to those matters set forth in the POA, and can extend no further. Our office typically drafts separate POAs for healthcare and general affairs. This allows for people to list separate individuals for these roles if they wish, as well as to allow for a bit of privacy.  

POAs can be durable or springing. A durable POA means that the document is effective immediately upon signing, and the POA could act immediately. A springing POA takes effect once the subject is declared incompetent. A doctor is the one that needs to declare the subject incompetent; and doctors are often loathe to do so. This can leave a gap in decision-making, bill paying, and handling of affairs. For this reason, a durable POA makes more sense for most people. Some clients are concerned about the POA being effective immediately. But ultimately, if you are trusting someone enough to handle your affairs should you need them to do so, you should trust them enough to not act when you don't need them to do so.

A POA is effective until revoked by the subject or until the death of the subject. After the death of a subject, a Personal Representative handles the affairs of the subject. The POA is no longer effective after death.

Guardian and/or Conservator

A guardian or conservator is a person appointed by a court to manage the affairs of the subject. His/her powers are limited by the court's grant of authority. Typical duties of the guardian or conservator include arranging for housing or care for the subject, paying bills, and handling property of the subject. For a lot of situations, the guardianship is indistinguishable in day to day practice from a POA. 

The Court can appoint either a guardian, or a conservator, or a guardian/conservator. Conservatorships are used when there are more significant assets at play. Guardianships are used when the subject's day to day affairs need to be managed. Both are sometimes needed and therefore appointed.

But the guardianship and/or conservatorship can only be terminated by the Court, rather than by the subject just revoking it. And the guardian/conservator has reporting requirements to the Court. This is an annual packet that has to be filed with the Court, with updates on the condition of the subject and his/her financial affairs. Other individuals can also participate in the guardianship/conservatorship proceedings by filing documents with the Court to be considered interested parties. Once an interested party, he/she is then entitled to notice about any hearings, as well as copies of documents filed with the Court. A guardianship proceeding provides for oversight of the affairs that is not found with a POA.

A guardianship/conservatorship is effective until terminated by the Court. It can be terminated by the Court because it is no longer needed, or due to the death of the subject. Guardians/conservators can also resign or be removed. A guardianship/conservatorship is no longer effective after death, and the guardian/conservator simply has final accounting type reports to submit to the Court.

Personal Representative

A personal representative is the person who handles the probate of the subject's estate after his/her death. This person is typically nominated in a Last Will and Testament, but then is appointed by the Court. A personal representative and an executor are the same thing, but personal representative is the term commonly used in practice now. 

The personal representative's duties are to carry out the directives of the Last Will and Testament, pay any final bills, and to wind up the final affairs of the subject. If there is no Last Will and Testament, then the Personal Representative's duties are dictated by state law. There are a whole host of documents that need to be filed with the Court in the probate proceedings, so most Personal Representatives choose to have an attorney assist them through the process.

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