Craig Watson on what happens if you don't have a power of attorney – LIVING WELL Magazine

What Happens if You Don’t Have a Power of Attorney?

By Craig Watson, Texoma LIVING WELL Magazine

My spring 2011 article, which appeared in this column, extolled the benefits of a durable power of attorney (POA). Every estate plan should include a POA. A POA is a document wherein a principal (you) appoints an agent (spouse, adult child or other trusted relative or friend) to manage your property, make legal decisions, and pay your bills, etc., if you become unable to handle your affairs due to injury or illness. Unfortunately, many people neglect to establish this inexpensive yet extremely important document. After a person becomes mentally incapacitated, it is too late for that person to sign a POA because the person is no longer competent to understand the consequences of their signature on the POA. An expensive, slow and inflexible court ordered guardianship may be the only alternative.


A guardianship is established by an applicant filing a petition in court called an application for letters of guardianship. The application contains all sorts of detailed information about the applicant and the proposed ward. The application must state the reasons that the ward needs a guardianship and the names and addresses of the applicant, ward and family members of the ward as well as details about the ward’s assets and income. The application must include a letter from the ward’s physician supporting the ward’s need to have a guardian appointed to manage his person and affairs. The physician’s letter must contain other details about the ward’s diagnosis, prognosis, medication, abilities, etc. The application must be personally handed to the ward, usually by a uniformed officer, which can be confusing and embarrassing to the mentally compromised ward.

When the application is filed, the court is required to appoint an attorney ad litem (AAL) to represent the ward in the proceedings. Note that at this point we have only just begun and we already have a physician and two attorneys involved who will all be paid out of the ward’s assets. Does this sound expensive yet? The AAL’s job is basically to 1) meet with the ward, 2) make sure that the ward truly does require a guardian, 3) determine that the applicant is worthy to be appointed guardian, and 4) represent the ward at the hearing. The court is required to post notice of the application for at least 10 business days before setting a hearing. At the hearing, the court will hear testimony and receive evidence that it would be in the ward’s best interests for the applicant to be appointed guardian of the ward.

Guardians of wards who own assets are required to immediately file an inventory describing and valuing the ward’s assets. The guardian must also post a bond large enough to insure the annual income the ward expects to receive as well as all of the ward’s liquid assets (cash, CDs, stocks, bonds, mutual funds, etc.). For the rest of the duration of the guardianship (usually for the rest of the ward’s life), the guardian must pay his attorney to prepare an application and order to obtain prior court approval before any of the ward’s assets can be sold or even used to pay the ward’s living expenses. The guardian is required to file an annual accounting showing the beginning balance of all the ward’s assets, the amounts received by the guardian, amounts disbursed by the guardian and the ending balance of all of the ward’s assets. The guardian must obtain a letter or other confirmation from the ward’s depository institutions confirming the ending balances of the ward’s accounts and obtain court approval of the accounting. When the ward dies, runs out of money or the guardianship is terminated, the guardian must file a final accounting and obtain a court order approving the accounting, releasing the guardian and his insurance company from the bond and closing the guardianship of the ward’s estate. Even if the ward has no assets, the guardian is required to file an annual report giving the court his location and detailing the ward’s condition, location and identity of the ward’s caregivers and medical providers.

As you can see, Texas law has a rigid and expensive process to provide you with a guardian if you become mentally incapacitated before you sign a POA. The guardianship procedure is very expensive because it requires an attorney to draft numerous pleadings and orders and attend many hearings. A guardianship can usually be avoided by signing a well drafted durable power of attorney.

Craig Watson’s legal practice is focused on estate and tax planning, probate, guardianships, elder law and corporate law. Formerly a CPA, he has over 20 years of experience and can be reached by calling 903-813-8500.