Living without Legal Capacity: Powers of Attorney and Guardianship – What does it all mean?

What happens if you are in an accident and, due to that accident, you are unable to understand enough to handle your affairs?  What if you have dementia that makes it so you cannot understand things?  Is there a solution?

The answer is yes. The law offers tools to assist you.

Health care power of attorney, durable financial power of attorney, and guardianship are legal tools available to help you during your incapacity.  These complex tools offer a method to appoint someone to act for you if you become incapacitated. With a power of attorney, you choose who you want to act for you. In a guardianship proceeding, the court chooses who will act for you.

Durable Financial and Health Care Power Of Attorney

In Wisconsin, both the durable financial and the health care power of attorney are valuable estate planning documents. They are contracts under which you delegate authority to another.  They allow you to appoint another to act in place of you for financial or health care purposes during your lifetime.  This is particularly helpful when and if you become incapacitated. There is a principal and the agent. The principal is the person authorizes another to act in his or her stead. The agent is the principal’s appointed decision maker.

With a durable financial power of attorney in place, your agent may pay bills and otherwise manage your financial affairs if you cannot do so yourself.  Your health care agent can make decisions about your medical care when you are unable to do so. Both powers of attorney remain in place until your death or until you revoke them.

Executing powers of attorney is a private and relatively inexpensive way to decide who will have the legal authority to carry out your financial and health care decisions if you can no longer do so.

Guardianship

A guardianship is handled through the probate court in a situation where a person is already mentally incompetent. If you become incapacitated, the court may, through a court order, appoint a substitute decision maker for you.  There is a guardian and the ward. The ward is the person who is no longer able to take care of his or her own affairs. The guardian is the ward’s substitute decision maker.

A guardianship can be temporary, but often becomes permanent after the court learns that the ward needs a permanent guardian. The guardian is typically authorized by the court to make legal, financial, and health care decisions for the ward. A guardianship action is an expensive and public process that involves a loss of an individual’s freedom and dignity. You will want to avoid this process if you can.

Why all three?

Knowing that a guardianship involves a loss of an individual’s freedom and dignity, Wisconsin law looks to avoid the appointment of a guardian unless a less restrictive alternative proves to be ineffective. The powers of attorney for finances and healthcare are two of the main alternatives available. Often, if drafted and executed properly, powers of attorney can help you avoid the need for a guardianship altogether.  Knowing this, it is very important to have these in place to avoid the expense and stress associated with the guardianship process.

Guardianships are still necessary and prevalent. The main reason for this is that many people never put the powers of attorney in place. Sometimes this is because they are unaware of the need. Other times folks fail to execute powers of attorney because they do not want to bother with or pay for them. However, it is good for you to know that it is too late once you lose capacity. You cannot sign a power of attorney if you cannot understand it. In that case you would have to use the guardianship system.

Sometimes a guardianship is unavoidable even if you have powers of attorney in place. For example, there are times when an individual wonders or is otherwise at risk. In that case, even if the powers of attorney are in place, a guardian will need to be appointed in order to handle affairs when a court orders a person under a guardianship to live in a type of facility. This process is called protective placement. While expensive, it is essential to have the court involved if someone is taking away your personal liberty.