PARENTS & HOMEOWNERS: MY 7-STEP ESTATE PLANNING PROCESS WILL PROTECT YOUR HEIRS
From Creditors, Predators & Bad Choices, And Will Help You Become a (Bigger) Hero to Your Family!
What is the Difference Between Power of Attorney and Conservatorship?
Certain situations may arise in anyone’s lifetime that leaves them unable to make personal or financial decisions for themselves. They may become incapacitated due to a medical condition that has rendered them unable to make their own choices. This type of circumstance often occurs in the case of an aging family member. When this happens, a power of attorney document may come into play, or if they wait too long, the individual could be placed into conservatorship.
If you or a loved one seem to be going down a difficult path that might lead to an inability to make important decisions independently, it is best to talk to a financial advisor sooner rather than later and prepare your family for the future.
What is Power of Attorney?
Power of attorney is a deliberate, voluntary legal assignment that allows a third party to make legally binding or protected decisions in your stead. If someone is granted power of attorney over you, they can access your banking records, pay bills, manage financial debts or loans, check your credit score, and legally make decisions for you concerning financial matters.
When granting someone power of attorney, understand that you can revoke it from that person at any time, as long as you are of sound mind and physically capable of doing so. You are also allowed to specify just how much power the person has and make rules concerning what they can or cannot touch. It is an entirely voluntary designation.
What is Conservatorship?
Conservatorship is similar to power of attorney, except that it is assigned via court order from a judge or hearing officer. During a conservatorship, the court takes legal rights away from an individual (a ‘ward’ in this context) and assigns them to a third party deemed the conservator.
While preparing a power of attorney document is relatively simple, entering into a conservatorship in California requires many steps. In these cases, the court determines whether a person can or cannot care for themselves independently. Under conservatorship, the ward loses many of their personal rights, and the conservator assumes the authority to handle the ward’s property, manage their finances, or even tell them where to live.
Conservatorships can either be general or limited. The court may only assign the conservator to look over a ward’s estate in a limited conservatorship. In a general conservatorship, the conservator can make nearly any decision regarding the ward’s medical, financial, and personal life. In both general and limited conservatorships, the conservator owes a fiduciary obligation, or duty of care, to the ward.
How Do I Set Up a Power of Attorney?
Only a principal who is over 18 and legally able to enter a contract can set up a power of attorney in California. The principal must sign the POA with two witnesses or a notary.
There are three types of powers of attorney (POA) in California: general POAs, limited POAs (sometimes called specific POAs), and healthcare POAs. There are also different categories of POAs on top of those, depending on when the POA comes into effect. A durable POA, which can be general or limited, goes into effect upon signing and remains in effect until it is destroyed or revoked by the principal. A springing POA, which can cover general or limited POAs and is ALWAYS the designation of a healthcare POA, goes into effect upon certain conditions.
If you are unsure as to which power of attorney form to use for yourself or how to properly execute it, speak to an attorney today by calling our law office at (805) 244-5291.