Power of Attorney vs. Conservatorship

A power of attorney (POA) and a conservatorship are both legal documents that grant an individual the ability to handle financial affairs or healthcare decisions on behalf of another person. 

In the U.S., these legal tools are often utilized for situations where an individual becomes medically incapacitated. By acting on their behalf, the individual with legal authority can complete tasks such as paying bills, managing property, or deciding end-of-life care. Resources like the power of attorney template can be useful when preparing a POA. As a POA and conservatorship are often used to serve this same purpose, many people struggle to know the difference between power of attorney and conservatorship. Nevertheless, there are some clear distinctions under U.S. law that can also be elucidated by a probate litigation lawyer. 

In this article, we cover the full legal definition of both types of legal documents and discuss the conservator vs power of attorney dispute. We then offer a direct comparison of conservatorship and power of attorney to help you decide which is best for your needs.

Power of attorney (POA) is a legal document that authorizes an individual (known as the "agent" or the "attorney-in-fact") to make decisions for another person (known as the "principal"). The principal always creates this document while they can still make wise and informed decisions for themselves. Typically, a power of attorney kicks into action once the principal becomes mentally incapacitated. However, there are instances where this isn't the case. 

For example, suppose the principal were to leave the country for several months and needed someone in the U.S. to manage their business decisions. In that case, they may file a temporary POA to appoint an agent to handle their findings in their absence.

The most common type of power of attorney document grants the agent general control over the principal's decisions regarding their financial affairs. However, a specific medical POA can be written, which grants the attorney-in-fact control over healthcare decisions and end-of-life treatment options. With that being said, there are limitations to a power of attorney; the agent will never have the authority to:

Is conservatorship the same as power of attorney? Actually, conservatorship is another form of legal document under U.S. law that appoints a person (known as a "conservator") to manage and make decisions for another individual (known as the "conservatee" or the "ward"). This document is always created by following court procedures and will only be put in place if the conservatee is somewhat disabled and thus is physically, mentally, or emotionally unable to take care of themselves. At the hearing, a judge will legally remove the rights from the conservatee and pass them on to the conservator. The overarching purpose of this is to ensure the well-being of the ward.

Several different powers can be given to the conservator. For example, they may be granted a "conservatorship of the person," which involves the managing of the conservatee's daily life. This includes making decisions on living arrangements for the ward, choices regarding healthcare, and other well-being judgments. A conservator of the person is more commonly referred to as a "legal guardian." On the other hand, power over the ward's financial affairs is authorized in a "conservatorship of the estate." This grants the conservator control over the person's finances, property, investments, and real estate portfolio. 

Does conservatorship override power of attorney? It is rather an alternative option than a better choice. There are still limitations on how the money can be spent and what the conservator must do. Accordingly, the conservator must do the following:

Now that we know the definitions of these two types of legal documents, we can say what is the difference between conservatorship and power of attorney. There are four main differences to note: (1) when the document is formed, (2) the involvement of the courts, (3) the costs involved, and (4) time restrictions and durations.

The primary power of attorney vs conservatorship dispute occurs when the legal document is formed. A power of attorney legally has to be made when the person who creates it is still of sound mind. In other words, they currently have the mental capacity to make informed decisions regarding their financial affairs and healthcare and are aware of the consequences of the legal document that they are signing. Therefore, if you are still of sound mind and want someone to look after your financial or health decisions later on in life or in your absence, a POA could be the way to go.

Conversely, a conservatorship is always put in place after the person has become mentally incapacitated and unable to make critical decisions independently. Therefore, if the person in need of help has already lost the ability to care for themselves, a conservatorship is required to grant another individual permission to manage their affairs.

The second difference between POA and conservatorship lies in the involvement of the courts. Although they are both legal documents, the courts are much more involved in the signing and managing of conservatorship vs. power of attorney disputes. The creation of a conservatorship requires a public proceeding during which a judge determines the mental debilitation of the person in need. The courts then appoint a legal guardian or conservator to manage this person's affairs and specify whether this individual has power over the person, the estate, or both. The courts will then continually monitor the conservatorship to ensure that all decisions are being made with the conservatee's best interests at heart.

When discussing POA vs conservatorship, it is also important to mention that anyone can create a power of attorney without input or help from the courts. The principal simply has to fill out a power of attorney form and sign the legal document voluntarily. At this point, the POA will become legally binding. It is best to speak to an attorney to ensure the wording on the document stands in a court of law. However, anyone can complete and submit a power of attorney without help from a lawyer.

The cost is another major difference between conservator and power of attorney. POAs can be completed with little or no costs involved. Many states in the U.S. have downloadable legal forms that can be accessed and used for free. In those states that don't, or for people who want non-standard powers to be granted to the agent, you will need to pay legal fees to have a lawyer create this document for you. Even if you complete the form yourself, we always recommend having an attorney look over the final document to ensure it is valid.

In such a way, the analysis of durable power of attorney vs conservatorship shows that conservatorships are much more expensive. You will be charged fees for filing the initial petition with the courts, which vary significantly from state to state. Additionally, there is the cost of the attorney who will prepare the petition and offer legal advice. Further, the conservatee will be represented by a lawyer in the court proceedings, who will charge further legal fees. The expenses don't stop there either. After the conservatorship has been established, the conservator has to present annual accounting reports to a judge. Many people hire an accountant to pull together these financial statements, costing yet more money.

The final key difference between conservatorship and power of attorney concerns time restrictions and duration. A conservatorship is usually always intact up until the point the conservatee dies; there is no set termination date. However, a temporary conservatorship can be put in place, which becomes invalid after 30 days if the conservatee's ability to care for themselves has returned. If the individual is still incapacitated, the document will stay intact and face annual reviews. If, at one of the review dates, it is decided the person has sufficient mental capacity, the conservatorship is ended.

Comparatively, a person can choose to create a non-durable or durable power of attorney. The former loses its legal effect when the principal becomes incapacitated, whereas the latter remains intact when the principal is no longer of sound mind and lasts up until death. Moreover, a non-durable POA can be of a specified length, such as for 30 days while the principal is overseas. The individual's mental capacity doesn't always have to be a factor when a power of attorney ends. 

When an incapacitated adult has both a conservator and an attorney-in-fact (also known as a power of attorney), their roles and responsibilities can vary depending on the specific circumstances and legal provisions in the applicable jurisdiction. Here are a few possible scenarios:

So, what is the difference between power of attorney and conservatorship? Both POAs and conservatorships share the commonality of transferring the authority to make health and/or financial decisions to another person. Although these similarities exist, there are distinct differences in the roles and implications of a conservator versus a power of attorney. These have been highlighted in this discussion and should aid you in determining which of these legal solutions is best suited for your needs. 

For further understanding of the conservatorship vs power of attorney dispute, you could delve into the in-depth legal resources. Should you need more specific templates related to business and contracts, Lawrina has a collection of them. As always, if in doubt, it's best to consult a lawyer for additional guidance on these legal matters.