Estate planning on behalf of an incapacitated spouse, parent or sibling can be painful and confusing. However, an individual’s capacities can change a lot over the years with illness and aging. When a loved one can no longer make sound decisions, it might be wise to have someone else (known as the agent) make the decision. There are two ways to do this: powers of attorney and guardianship.
Texas Powers of Attorney
When you set up a power of attorney, you are setting up a legal document where one person authorizes the other (known as an agent) to act on their behalf. The scope of your power of attorney depends entirely on your needs. A General Power of Attorney authorizes your agent to make any and all of your decisions for you, whether they are personal or financial. A Limited Power of Attorney means that you give your agent authority to only make specific decision on your behalf.
You can also decide when the agent can make decisions on your behalf. If you want your agent to be authorized to only make decisions when you are declared legally incompetent, you will want a springing power of attorney. If you are dealing with someone you already trust, you might want them to make decisions for you immediately—in other words, a durable power of attorney.
It is important to note that you must be legally competent to execute a power of attorney or to revoke it.
Guardianship of the Person
Unlike powers of attorney, a guardianship is set up for an individual who is considered unable to care for their own well-being—usually a minor child or disabled child (known as a ward). Guardianship is most useful when you have minor children who might outlive you. Parents of a minor or disabled child may appoint a guardian in the event of the parent’s death or disability. The guardian is considered a substitute decision maker who must look out for the general welfare of their ward.
Guardianship in Texas is covered by the Texas Estate Codes and requires going before the probate court. Unlike powers of attorney where the agent makes decisions for you, guardianship means you are the court-appointed decisionmaker for another person.
Guardianship of the Estate
Texas separates guardianship into two categories: Guardianship of the Person (discussed above) and guardianship of the estate. While the guardian if the person is responsible for the care of the ward, a guardian of the estate is responsible for the management of the estate when you are unable to manage your property due to illness or disability.
As with a guardian of the person, a guardian of the estate must be appointed through the probate. After an investigation and hearing, the court will determine if a guardianship is even necessary. if it is, guardianship creates a legal relationship with the probate court and the guardian must file annual accountings to update the court on the status of the finances.
Which Should You Choose?
Sometimes it depends on cost. A power of attorney is much less costly than a guardianship, and far more private because there is no probate proceeding. It also gives you a significant amount of control over who your agent is. However, remember that the principal must have capacity to execute a power of attorney. Guardianships are court orders, which mean that all institutions must honor them. This is not the case with powers of attorney. In the end, your circumstances might require any one of these.