By Dirk Bromberek, Attorney, Generation Law

It isn’t unusual for people to wait until their retirement years to contact an attorney to discuss powers of attorney (and other estate planning matters). The need for powers of attorney is often (and erroneously) associated with aging. Most people do not understand the risks and potential consequences of not having valid powers of attorney. Consider the following scenario:

A family member suffers an unexpected traumatic brain injury (“TBI”), as the result of a fall, an automobile accident, or a stroke. As a result of the TBI, the individual no longer has the ability to make decisions and, further, lacks the capacity to nominate an agent to make decisions on his or her behalf. While hospitals will allow next of kin to make medical decisions in emergency circumstances, this authority is very limited and will only apply in cases like the one described above.

Without powers of attorney, family members are unable to access medical records, direct care at rehabilitation facilities, and make other long-term care decisions. Further, if family members do not have access to the injured individuals’ assets, they may be unable to pay for the care that their family member requires. At this point, the only option available to the family of the injured person is to petition the court for guardianship of their loved one, requesting that the court appoint a guardian on behalf of the disabled person for healthcare and financial purposes. Once the petition has been filed, it often takes 30 to 60 days before a guardian is appointed by the court. The court will consider appointment of two types of guardians. The guardian of the estate is responsible for managing the disabled’s finances. The guardian of the person is responsible for making medical decisions on behalf of the disabled person.

Before a court will appoint a guardian of the estate, the proposed guardian must obtain a bond issued by a bond company. The bond insures the disabled person’s assets and requires payment of an annual premium. The amount of the bond and premium is determined by the value of the disabled person’s estate. The bond must remain in place through the pendency of the guardianship unless the disabled person’s estate is depleted.

Once guardians have been appointed, there is continued oversight by the court. The guardian of the estate must present annual accountings to the court that detail the disabled person’s income and expenditures. The guardian of the estate must obtain court approval before selling assets such as the disabled person’s home or car. You may be surprised to learn that the guardian of the estate must also obtain approval to make large expenditures on behalf of the disabled person, even if needed for necessary medical procedures. Moreover, the guardian of the person must obtain court approval before they can place the disabled person in a long-term care facility. The guardian of the person must present annual reports to the court that describe the disabled person’s overall health and well-being.

Finally, the costs associated with guardianship greatly exceed the cost of powers of attorney. In addition to annual bond premiums, the attorney’s fees and costs associated with guardianship typically range between $6,000 to $12,000. Conversely, the cost to have powers of attorney prepared by a legal professional is under $1,000. As an attorney that focuses his practice on guardianships, I highly recommend that you contact an attorney to set up powers of attorney and avoid the oversight and cost associated with guardianship if the unexpected happens.

Keep in mind, everyone age 18 and over should have powers of attorney in place. If you have children or grandchildren headed off to college this fall, get these done soon! It is important to understand that once your child reaches age 18, you no longer have rights to your child’s health care information, unfettered access to their medical professionals, or the ability to make medical decisions for them without powers of attorney.