It’s critical to comprehend the distinction between an executor’s duties under a will and those of an attorney-in-fact under a power of attorney when creating your estate plans. Although they both entail designating someone else to carry out your instructions, their responsibilities differ slightly and are completed at different times.
Continue reading to learn more about each of these crucial designations for estate planning and what factors to take into account when creating a power of attorney or will.
Navigating the complexities of estate planning can be daunting, especially when it comes to understanding the roles of different individuals involved in managing your affairs. Two key figures often mentioned in this context are the power of attorney and the executor. While their responsibilities may seem similar at first glance, there are crucial distinctions between these roles, particularly in terms of timing and scope of authority.
Power of Attorney: Acting on Your Behalf While You’re Alive
A power of attorney is a legal document that empowers an individual, known as your agent, to make decisions and act on your behalf when you are unable to do so yourself. This can be due to various reasons, such as physical or mental incapacity, illness, or simply being away on a trip.
The scope of authority granted to your agent can be tailored to your specific needs and preferences. Some common powers granted in a power of attorney include:
- Financial management: Handling your bank accounts, investments, and other financial matters.
- Property management: Making decisions about your real estate and other property.
- Healthcare decisions: Making medical decisions on your behalf, including consenting to treatment.
- Legal matters: Representing you in legal proceedings.
It’s important to note that the power of attorney ceases to be valid upon your death. Your agent’s authority ends, and your estate will be handled according to the terms of your will or by a court-appointed administrator.
Executor: Managing Your Estate After Your Passing
An executor is a person designated in your will to handle the administration of your estate after your death. This involves a range of responsibilities, including:
- Gathering and inventorying assets: Identifying and collecting all your assets, such as property, bank accounts, and investments.
- Paying debts and taxes: Settling outstanding debts and paying any taxes owed by the estate.
- Distributing assets to beneficiaries: Following the instructions in your will to distribute your assets to your designated beneficiaries.
- Managing legal matters: Handling any legal issues related to the estate, such as probate proceedings.
The executor is appointed by the probate court and is accountable to the court for their actions. They have a fiduciary duty to act in the best interests of the estate and its beneficiaries.
Key Differences between Power of Attorney and Executor
The table below summarizes the key differences between a power of attorney and an executor:
| Feature | Power of Attorney | Executor |
|---|---|---|
| Timing | Acts on your behalf while you are alive | Acts after your death |
| Appointment | Designated by you in a power of attorney document | Designated by you in your will and appointed by the probate court |
| Scope of Authority | Varies depending on the powers granted in the document | Manages all aspects of your estate |
| Accountability | Accountable to you | Accountable to the probate court |
| Duration | Ends upon your death | Continues until the estate is settled |
Choosing the Right People for Each Role
Selecting the right individuals for both roles is crucial for ensuring your wishes are respected and your affairs are handled smoothly. Here are some factors to consider when making your choices:
- Trustworthiness: Both your agent and executor should be individuals you trust implicitly to act in your best interests.
- Competence: They should have the necessary skills and knowledge to handle the responsibilities associated with each role.
- Availability: They should be willing and able to dedicate the time and effort required to fulfill their duties.
It’s important to have open and honest conversations with the individuals you are considering for these roles. Discuss your expectations, their responsibilities, and any potential challenges they may face.
Understanding the distinct roles of power of attorney and executor is essential for effective estate planning. By carefully selecting individuals for these roles and ensuring they are well-prepared for their responsibilities, you can help ensure a smooth and efficient administration of your estate after your passing. Remember, these are both significant roles with substantial responsibilities, so choose individuals you trust and who are capable of handling the tasks involved.
This means that individuals must have both a Will (Executor) designating someone to handle their estate after death and a Power of Attorney (Agent) granting someone the right to act on their behalf while they are still living.
For more information on Powers of Attorney see my recent blog post PA’s New Law on Powers of Attorney: What You Need to Know
You won’t be able to handle your own financial and personal matters one day. This may be because you are alive but incapacitated. Or it may be because of your death. When that time comes, you’ll still need to manage your assets and pay your taxes and bills. Someone will require the authority to take over and manage your affairs when you are no longer capable of doing so because of illness or death.
The person you designate in your Will to handle your affairs after death is known as an executor. With a Power of Attorney, you designate someone to act as your agent or attorney-in-fact while you’re still living.
In general, the moment of your death is when your Power of Attorney expires. Only while you are still living can your agent handle your affairs. After your death, your Executor should take over. Your Executor must file your Will, a death certificate, and other legal documents with a court official in a process known as “probate” in order to obtain authority. “Your Executor is not authorized to act on your behalf while you are alive, even though they are listed in your Will.”
What is an executor of a Will?
After a person passes away, their Last Will and Testament—often referred to as just the “Will” for short—is carried out by an executor. The testator, or the person to whom the Will belongs, names an executor in the written Will. When drafting a will, a person has the option to name co-executors to serve jointly or to name a primary executor followed by a secondary, alternate executor. Throughout their lifetime, a person may revise their Will to name a different executor as often as they please. But in order to make sure the deceased person’s wishes, as stated in the Will, are carried out after death, a court must designate a replacement if the designated executors are not alive to serve or choose not to serve. A person is referred to as a personal administrator when they are chosen by the court and are not mentioned in the Will.
#270 | Power of Attorney vs Executor
FAQ
Is an executor the same as power of attorney?
What is the highest form of power of attorney?
Who is the best person to be power of attorney?
Who has more power executor or trustee?
What is the difference between power of attorney and executor?
The main difference between an agent with power of attorney and the executor of a will is that one represents a living person while they are alive, and the other represents a decedent’s estate while they are dead. The two do not intersect at any point. This effectively means that one person can fulfill both roles.
Should I give one person power of attorney and name a executor?
As mentioned above, there are differences between the two responsibilities and it might make sense to give one person power of attorney and name someone else the estate executor. If you’re planning your own estate, consult your lawyer to see what makes the most sense for you.
What is the difference between a PoA and an executor?
The biggest difference is that the agent under a POA has the authority to act on behalf of a principal while they are alive, and an executor acts on behalf of a person’s estate once they have passed. Once the principal dies, a POA expires, and no one can act on the principal’s behalf.
What is the difference between an executor and an agent?
The most salient difference between the executor and the agent is when the two roles take effect. Power of attorney is relevant to situations in which you are alive but unable to make your own decisions. Your executor’s duties begin only after you have died.