A power of attorney is defined on ExpertLaw as "a legal instrument that grants another person the authority to act as your legal representative, and to make binding legal and financial decisions on your behalf." The site defines "conservatorship" as "a legal right given to a person to be responsible for the assets and finances of a person deemed fully or partially incapable of providing these necessities for himself or herself." While these definitions are similar, a power of attorney allows you to choose and appoint the person to act for you. With a conservatorship, however, the conservator is appointed by the court.
Types of Power of Attorney
A power of attorney names a person, referred to as an agent, to act on your behalf if you become unable to make decisions and handle your affairs on your own. The power of attorney can be written to handle a variety of tasks, from selling a piece of property to taking care of all your finances. The types include:
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- A general power of attorney takes effect when you sign it but ends if you become mentally incapacitated.
- A durable power of attorney lets your agent handle your finances even if you are capable of doing so.
- A springing -- or contingent -- power of attorney takes effect only when two doctors, whom you have named, certify that you are incapacitated.
Your Agent's Job
In drafting your power of attorney, you give your agent the authority to pay your bills and other expenses out of your assets, buy and sell property, handle your income taxes and real estate taxes, collect your government benefits, and manage any other financial responsibilities you choose. Your power of attorney can be as extensive or as limited as you wish.
A durable financial power of attorney ends when you die. Otherwise, you can revoke it at any time, as long as you are competent to handle your legal affairs, or a court can invalidate it if it deems you were incompetent or under undue influence.
When a Conservator Is Required
A conservator is needed when a person has physical or mental disabilities that keep him from handling his own financial matters, and he has no power of attorney or other legal authorization allowing someone to take over those affairs for him. Depending on the rules of the specific jurisdiction, someone needing a conservator for a relative, for example, must petition the probate court by submitting official statements establishing the relative's incapacity.
The court expert evaluates the person and may appoint another professional to examine the individual. The court can hold a hearing and ultimately appoint a conservator. The court requires annual reports to prove that the person's assets are being managed properly. Officials also have the right to check on the physical care the individual is receiving. While a power of attorney allows the maker of the POA, if practical, to handle his own financial affairs, a conservator has complete control over those affairs.
Plan for a POA
The best way to avoid requiring an expensive and time-consuming conservatorship is through estate planning that includes a durable power of attorney. That way, the agent you select is responsible for managing your finances as you wish, rather than leaving financial decisions and management up to a conservator or the court.