Power of Attorney vs Guardianship - Which is Needed?

In Pennsylvania, there are two (2) documents that allow another person to make decisions on your behalf. The creator of the document is the “principal” and the individual designated is the “agent.” In order to execute these documents, the principal must have capacity to sign legal documents, if they do not, then a Guardianship may be needed.

The first document is a General Durable Power of Attorney, commonly referred to as a “POA”. This document allows you to designate another individual to make financial decisions on your behalf. This broadly can include the power to sign checks, open and close bank accounts, take out loans, and buy and sell real estate. It’s a very helpful tool for aging clients who want their children or other designee to be able to assist with paying bills, coordinating care, and ensuring their personal finances are being managed properly.

The second is an Advance Health Care Directive (which also contains a Living Will in addition to a Health Care Power of Attorney). Similar to the POA, the Advance Health Care Directive allows you to designate an individual to make medical decisions for you in the event you are unable to make such decisions yourself. This document allows the agent to obtain medical records, speak with healthcare providers, and make healthcare decisions for the principal. Again, this document is beneficial for aging clients, as well as clients who are undergoing a medical procedure that may require another person to make a decision while they are unconscious.

Under both documents described above, the principal can remove the agent at any time during the principal’s life. At the principal’s death, the POA and the Advance Health Care Directive terminate and the agent can no longer act on the principal’s behalf with regard to financial or medical matters.

A Guardianship provides the Guardian with the same powers as an agent under a POA or Advance Health Care Directive, but requires Court approval rather than an appointment by the principal. A Guardianship is typically deployed in cases where an individual over the age of majority requires another adult to handle their day-to-day affairs and finances. A Guardianship is obtained by petitioning the Court and demonstrating that the individual cannot care for themselves and their affairs. When an individual does not have capacity to sign legal documents, a Guardianship is used for another to be able to make decisions (both financial and medical) on their behalf. A Guardianship is also subject to Court oversight and requires the filing of annual reports with the Court of the assets of the incapacitated individual.

Guardianships are typically used for those who have diminished capacity (due to age or illness) who have not previously executed a POA or Advance Health Care Directive, those whose agents under their POA or Advance Health Care Directive cannot or will not act for them, and those who were never able to execute a POA or Advance Health Care Directive due to a disability.

Please feel free to contact an attorney in the MacDonald, Illig Trusts & Estates Practice Group to determine if executing a POA and Advance Health Care Directive or obtaining a Guardianship is more appropriate for you and your loved ones.

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