If an individual lacks the mental capacity necessary to make rational choices, there are two ways recognized by the law for proving a substitute decision maker: (1) the individual, while he was still competent, designated someone to be their agent, also known as an attorney-in-fact, by signing a power of attorney, or (2) the state, acting through the courts, may appoint a substitute decision maker known as a guardian (also sometimes called a “conservator”), for the incapacitated individual.
Power of Attorney
A "power of attorney" is a document which is signed by an individual (the "principal") appointing another person or persons (called the "attorney-in-fact" or "agent") to act for and on behalf of the principal. If the power of attorney authorizes the agent to act for the principal in almost all circumstances, it is called a "general" power of attorney. If the power of attorney is effective even if the principal is disabled or incompetent, it is called a "durable" power of attorney.
A person executing a durable general power of attorney naming a husband, wife, child, or other family member as attorney-in-fact authorizes that family member to manage his or her financial and personal affairs even after incapacity, avoiding the need for any guardianship.
Spouse Has No Legal Authority
Just because you are married does not give you legal authority over the property and person of your spouse. It is absolutely essential that you give your spouse, or some other person you trust, power of attorney. If your spouse becomes incapacitated and you don’t hold his or her power of attorney, you cannot sell the home you own jointly, cannot make withdrawals from your spouse’s IRA or other retirement plan, and cannot act for your spouse in any other legal capacity. If you don’t have a power of attorney, the only other alternative is a court appointed guardian.
The court procedure is termed a “guardianship” in Pennsylvania, In some other states, the procedure is referred to as a “conservatorship.” The individual for whom a guardian has been appointed is called a “ward.” Sometimes the ward is referred to as an “incapacitated person,” which has replaced the old-fashioned and offensive nomenclature of an “incompetent person.” The court appoints a guardian after hearing evidence that a person is incapacitated and deciding that there is a need for a guardian. The law requires due process for the proposed ward. The proposed ward, or alleged incapacitated person, must be given formal legal notice of the proceeding, has a right to be present at the hearing, and has the right to be represented by a lawyer.
Who is incapacitated?
The Pennsylvania guardianship statute defines an incapacitated person as follows: “Incapacitated person" means an adult whose ability to receive and evaluate information effectively and communicate decisions in any way is impaired to such a significant extent that he is partially or totally unable to manage his financial resources or to meet essential requirements for his physical health and safety. Whether or not an individual is incapacitated within the meaning of the statue depends on their actions, not on a diagnosis. A medical diagnosis of dementia or Alzheimer’s is not enough to meet the statutory definition.
The most common reason for guardianship is that the incapacitated person cannot pay bills. Another reason for guardianship is that an unscrupulous individual is taking advantage of the alleged incapacitated person by inducing him or her to give away money or to sign documents under undue influence. A guardianship proceeding can stop this and the guardian can recover stolen assets.
Sometimes incapacitated people do not receive proper medical care, or they become incapable of dressing, bathing, toileting and obtaining food. Sometimes large amounts of “stuff” accumulates in the homes of incapacitated people. A guardian can take care of all of these situations.
Who can be the guardian?
The court may appoint any qualified individual, bank, trust company, or non-profit corporation. A person who has a conflict of interest with the ward is generally not an appropriate person to appoint as a guardian. Similarly, anyone providing residential services to a proposed ward is not a suitable guardian.
Once appointed, it is the duty of the guardian to protect the rights and best interests or the ward. The guardian must respect the expressed wishes and preferences of the incapacitated person to the greatest possible extent and must encourage the ward to participate in all decisions to the maximum extent of his abilities. As you can imagine, ensuring the best interests of the ward may mean that the guardian will not follow the wishes of the ward. For example, the ward may want to continue to live in her home, but the guardian may determine that assisted living or skilled care is required. The guardian can admit the ward to a facility even over the ward's objections.
Expense of a Guardianship?
Court appointment of a guardian can be very expensive. There are court fees, attorney fees, fees for the doctor or other persons who give testimony about capacity. Often there is an attorney for the petitioner who is requesting that the guardian be appointed and another attorney for the proposed ward. If the court appoints a guardian, the fees are paid from the incapacitated person's property.
After the guardian is appointed, annual reports are required to the court and there are restrictions on what the guardian can do without court approval. The guardian is entitled to a fee for services. Often a family member will serve without taking a fee, but if an agency, bank or trust company serves, they charge for their services.
Avoid Guardianship with a Power of Attorney
Making a power of attorney which appoints an agent to make personal and financial decisions can make guardianship proceedings unnecessary. Making a power of attorney is much less expensive and much less stressful than the court-appointed guardian process.