Guardianship and Power of Attorney
What is a Power of Attorney?
A power of attorney is a legal document where one person (the principal) authorizes another (the agent) to act on their behalf. There are powers of attorney for assets which allow your agent to make decisions regarding your property and there are powers of attorney for health care which allow your agent to make decisions regarding your health care needs.
Your power of attorney can be broad in scope, giving your agent the ability to make any and all financial and personal decisions for you (a General Power of Attorney) or you can limit your agents authority by specifying the types of decisions you would like them to make on your behalf (a Limited Power of Attorney).
You also have a choice whether you would like your agent to have the ability to make decisions both now and if you become incompetent (a Durable Power of Attorney) or your agent can be limited to make decisions only when you become incompetent (a Springing Power of Attorney). You must be competent to execute a power of attorney. If you are not competent to execute a power of attorney, then a guardianship may be necessary.
What is a Guardianship?
Guardianship is a legal relationship where a court gives a person (the guardian) the power to make personal or financial decisions for another (the protected person). A family member, public or professional guardian initiates the proceedings by filing a petition in the proper court. A guardianship over the person gives the guardian the power to make personal decisions for the Protected Person. A guardianship over the estate gives the guardian the power to make financial decisions for the Protected Person. Often the court appoints the same person as guardian of the person and guardian of the estate.
Appropriate documentation is necessary to establish the need for a guardianship. Once a guardianship is established, the guardian has many reporting requirements to the Court, including filing a care plan, a budget, an inventory, annual reports, and annual accountings. Court permission must be sought in many instances.
A power of attorney is a private way to decide who will have the legal authority to carry out your wishes if you can no longer speak or act for yourself. It is less costly than a guardianship, which is a public proceeding and the person appointed as your guardian may not be the person you would have chosen.
A power of attorney is limited in its authority to the scope of the document. Financial institutions sometimes refuse to honor powers of attorney for assets, due in part to their fraudulent use by agents. In contrast, a guardian has broad legal authority which is recognized by medical providers and financial institutions. A guardian is subject to court supervision for protection. Contact an attorney to appropriately address your situation.
We encourage people to plan ahead and that usually includes putting in place well-drafted powers of attorney for health care and powers of attorney for assets. These documents can be crucial to avoiding guardianship, and we strongly encourage families to do what they can to avoid guardianship.
Is a power of attorney better than a guardianship?
Guardianship is where someone petitions the court to be appointed as a guardian of another person who needs assistance. A power of attorney is where you sign a legal document naming the person or persons who will help you with their finances or health care. You must have the proper level of capacity to sign a power of attorney. In Nevada, there is a durable power of attorney for financial matters where a person selects the person to make financial decisions and specifies the details of that authority. There is also a durable power of attorney for health care where you name the person to make medical decisions when you are no longer able, and you state your wishes regarding medical treatment. We advise our clients to do what they can to avoid guardianship as it is expensive and there are many reporting requirements. Thus, it is advisable to get your planning in place while you still can. If you lack capacity to execute a power of attorney, then a guardianship may be necessary, but it should be the last resort.
Do I need to use my bank’s form for power of attorney?
There is no requirement under Nevada law that the power of attorney must be in a specific format, so the bank is not following Nevada law if they say the power of attorney must be their form. But you may still want to execute their form, knowing that it is only good for that bank. You should also consider executing a broader power of attorney for financial matters that will allow the person you name to be able to handle other matters.
My bank refused to honor the power of attorney. Do I now need a guardianship?
If the power of attorney is validly executed and has not been revoked, you should take steps to get the bank to honor it and avoid the guardianship process. It is best if the power of attorney is signed before a notary public who acknowledges the principal’s signature. If a power of attorney has been acknowledged, Nevada Revised Statutes state that the bank shall either accept the acknowledged power of attorney or request a certification or an opinion of counsel. (See NRS 162A.370) There are a few exceptions to when a bank does not need to honor an acknowledged power of attorney, such as a good faith belief that the power is not valid or there is a belief that someone has made a report of abuse or exploitation. A first step may be to ask the bank to put in writing the exact reasons that they have concerns with the power of attorney. If the power of attorney was drafted by an attorney, that attorney can prepare an opinion of counsel, which is among the reasons to have your power of attorney prepared by an attorney.
Contact A Probate Lawyer Today
For more information or to schedule an appointment with an experienced lawyer about the power of attorney or guardianship process, please contact us either through a call to our Las Vegas office at 702-255-2000 or a message through our online contact form.