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Power of Attorney vs. Guardianship

In many areas of law, there are ways to prevent problems — and there are ways to deal with the problem after it happens. When it comes to estate planning, powers of attorney and guardianships are perfect examples. A well-thought-out and properly executed power of attorney could prevent the need for an Indiana guardianship. Getting a power of attorney is far easier, faster and less expensive than a guardianship proceeding.

The underlying issue is an adult who, in the future, may be unable to make decisions concerning his or her healthcare, financial matters or daily life. That adult can be anyone, but those facing chronic physical or psychiatric conditions or the elderly may be more likely to find themselves in that situation faster than others.

Indiana Powers of Attorney

A power of attorney is a legal document created by the principal, an adult who’s mentally competent. It gives another person, the agent, the ability to make certain decisions or handle given affairs for the principal. These documents normally cover financial and healthcare issues and can be as narrow or as broad as the principal sees fit.

As long as the principal is mentally competent, the power of attorney can be revoked or changed and the agent can be removed and replaced.

A financial power of attorney can allow a person to handle a narrow range of financial issues (pay bills and the mortgage) or encompass all financial issues (freedom to control all assets and income, make investment decisions, sell real estate and pay all debts and bills).

  • The power of attorney can be durable (it becomes effective when it’s completed) or springing (it becomes effective only if the principal is no longer competent to make the decisions).
  • Whether a power of attorney is durable or springing is up to the principal. The durable power of attorney is more useful, because the agent’s ability to make decisions may come and go if the principal gains and loses his or her mental capacity.

A healthcare power of attorney allows the principal to name an agent who will make healthcare decisions for the person if the principal can’t make them on his or her own. A health care provider must take direction from a mentally competent patient, so these powers of attorney apply only when the patient is no longer capable of making medical decisions.

Given the important roles the agent plays, it’s critical for the principal to name an agent who’s ready, willing and able to do the job. The agent could be trusted with life or death healthcare decisions or decisions that could potentially financially ruin the principal, so it’s important that the person be trustworthy and capable of making such decisions.

If there are appropriate powers of attorney in place in case the principal becomes incompetent to make important decisions due to an illness, physical or psychiatric condition, accident or advanced age, others are in place to make decisions for the person. Bills are paid, assets are managed and medical decisions are made.

Indiana Guardianship Proceedings

What happens if the person becomes incompetent to make decisions but there are no powers of attorney in place?

For healthcare issues, it’s the next of kin who will be asked to make healthcare decisions. If the person is married, that’s the spouse, assuming he or she is capable of making such decisions. If that’s not the case, adult children, if any, are next in line. That can be a problem if there is more than one and they disagree on how treatment should be handled.

For financial matters, unless someone else is listed on an account, it may be practically impossible for a family member to gain access to bank or financial accounts to obtain money to pay bills. A failure to pay rent could result in eviction; failure to pay the mortgage could result in foreclosure; medical insurance may be lost if premiums aren’t paid.

In these situations, a guardianship proceeding would be the next step. Through this legal procedure, a person is appointed by a court to make decisions for someone who no longer can make decisions for himself/herself (a “protected person”). There are generally two types of guardians:

  • A “guardian of the person” makes decisions concerning the person’s personal needs, including medical care.
  • A “guardian of the estate” handles their business or financial affairs.

If the protected person is disabled enough, one person or two people may be both types of guardians.

A person will be declared incompetent and in need of a guardian if he lacks sufficient capacity to manage his own affairs or to make or communicate important decisions about his health, property or family. Most courts require that you at least obtain a letter from a doctor, explaining why the doctor feels that the person is incompetent.

If the incompetent person does not have a lawyer, the court will likely appoint a lawyer to represent the incompetent person at the hearing. This temporary representative is a “guardian ad litem.” The incompetent person also has a right to have a personal lawyer present at the hearing. In Kentucky, a hearing before a judge and jury is required to determine the individual’s need for a guardian.

We Can Help with an Indiana Power of Attorney or Guardianship

Whether you’re in Indiana or Kentucky and planning for your own future or the future of a loved one, Church, Langdon, Lopp, Banet Law can answer your questions about powers of attorney or guardianship proceedings and represent you or your family in these critical matters. Contact us today to start finding solutions. Complete our online form or call us at (812) 725-8224.

Attorney Gary Banet

Attorney Gary BanetGary is licensed to practice law in both Indiana and Kentucky. He concentrates his practice in estate planning, estate and trust administration, estate and trust litigation, guardianships, elder law and special-needs planning. Gary earned his J.D. from the University of Louisville, Louis D. Brandeis School of Law, and formerly practiced law at Bingham Greenebaum Doll and Wyatt, Tarrant & Combs.
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