Power of Attorney vs Guardianship: What Is The Difference?

When planning for the future, knowing the difference between a power of attorney and guardianship is important.

Both are legal tools allowing someone to make decisions on your behalf. But they both have different purposes and cover different areas of your life.

This blog will clarify those differences. Why? So that you can make an informed decisions about who to appoint as your power of attorney and enduring guardian.

What is a Power of Attorney?

A power of attorney (POA) is a legal document allowing you to appoint someone you trust to manage your financial affairs and property.

That person becomes your attorney.

What does a Power of Attorney do? 

An attorney can handle various tasks, such as: 

• operate bank accounts
• paying bills
• buying or selling property
• manage investments

Essentially, they step into your shoes to ensure your financial and legal matters are looked after. 

Are there different types of Power of Attorney?

Yes, there are several types of power of attorney:  

• General Power of Attorney. This is usually for a specific period or purpose and ceases to be effective if you lose capacity.
• Enduring Power of Attorney. This remains in effect even if you lose the capacity to make decisions. It is crucial for long-term planning.
• Limited power of attorney. Restricts the attorney's authority to specific tasks or for a limited timeframe.

Getting Power of Attorney

There's a legal form to complete to setup a power of attorney. This needs to be witnessed by an authorised person.

We recommend seeking legal advice before setting up a power of attorney. Legal advice ensures the document meets all legal requirements and truly reflects your wishes.

What is Guardianship?

Guardianship is often referred to as enduring guardianship in Australia. It's a legal arrangement where a person is appointed to make personal, lifestyle and healthcare decisions for you. They're called a guardian and can only make these decisions when you don't have capacity to make them yourself.

What are the different types of Guardianship?

There are generally two types of guardianship:  

• Enduring Guardianship. This allows you to appoint someone to make personal and healthcare decisions on your behalf if you lose capacity.
• Legal Guardianship. If you haven't setup an enduring guardian, and become incapacitated, a Court can appoint a guardian for you.

Key difference between Power of Attorney and Guardianship

Both arrangements involve giving authority to another person. However, there are some key differences between power of attorney and guardianship, namely:

1. Scope of authority. A POA typically covers financial and property matters. Guardianship focuses on personal, lifestyle and healthcare decisions.
2. Appointment process. You can appoint both a power of attorney and guardianship, as long as you're not incapacitated. But a Court can also appoint a guardian for you when you haven't appointed an enduring guardian.
3. Activation. With a power of attorney, you can appoint one to act immediately or when you lose capacity. An enduring guardian can only act when you're incapable of making your own decisions.

In Australia, the rules and forms for power of attorney and guardianship can vary by state. 

Legal advice is essential

It's essential to seek legal advice before appointing anyone as your attorney or enduring guardian. 

We can help you understand the implications and ensure that your documents are correctly prepared and executed.

Conclusion

Both a Power of Attorney and enduring guardians are important to cover different aspects of your life. Understanding the differences between them is vital for your future planning. It’s also important that your wishes are respected.

Our Wills & Estates team can help you get started on your power of attorney or guardianship documents. Get in touch with our experienced team today.