Learning the Differences Between a Power of Attorney and a Guardianship, Part I

By Fredrick P. Niemann, Esq. of Hanlon Niemann, a NJ Guardianship Attorney

What is the difference between a power of attorney and a guardianship? In one form or another, I find myself answering this question several times a week.

First of all, you have to start with the premise that all individuals over the age of eighteen are presumed to be capable of making their own decisions. Even children who are profoundly disabled and clearly incapable of making informed decisions for themselves are presumed to be capable of making their own decisions upon attaining the age of eighteen.

Secondly, no one else can make financial decisions for another person who has attained the age of eighteen unless they are the person’s guardian or power of attorney agent. A wife cannot make financial decisions for her husband unless the wife is the husband’s guardian or power of attorney agent. A mother cannot make financial decisions for her son unless the mother is the son’s guardian or power of attorney agent.

A power of attorney and guardianship have both similarities and differences. In total, there are more differences than similarities.

A power of attorney is a document that one person, called the “principal,” signs in favor of another person, called the “agent,” that permits the agent to make financial decisions for the principal. An agent can only make those financial decisions that are stated in the power of attorney document. For instance, if the power of attorney only permits the agent to access the principal’s bank accounts, then that is all the agent can do. If the power of attorney is very comprehensive and permits the agent to make any financial decision that the principal could make, then the agent can make all of those financial decisions for the agent.

A power of attorney is a voluntarily document. A person does not have to sign a power of attorney. A principal can revoke the power of attorney any time he wants, and the principal must have sufficient mental capacity to sign the power of attorney.

In order to sign a power of attorney, the principal must understand the nature and consequences of his actions. He must understand who he is appointing as his agent, and he must understand the authority he is giving to the agent.

If a person cannot understand these things, then he cannot sign a power of attorney. I frequently have people come to me who cannot comprehend the nature of their actions in signing a power of attorney, so I cannot draft a power of attorney for them.

In my next post, I’ll finish my discussion on this topic. If you have questions concerning a power of attorney or guardianship, please contact me toll-free at (855) 376-5291 or email me at fniemann@hnlawfirm.com/, or you can visit my Power of Attorney website at www.powerofattorneylawyerinnj.com and our guardianship site at www.newjerseyguardianshipattorney.com.

 

Posted in Guardianship.