It’s easy to become perplexed regarding the distinction between power of attorney and executor of the estate. Both individuals handle financial matters on behalf of someone else. However, the key disparity lies in the fact that a person with power of attorney assumes responsibilities while the individual is alive, whereas the executor of the estate assumes responsibilities after the person’s demise.
What Is Power of Attorney?
Power of attorney is a legal document that grants one person, commonly referred to as the agent, control over certain decisions made for and on behalf of another person.
There are several types of powers of attorney, with the most prevalent being medical power of attorney and financial power of attorney.
A medical power of attorney empowers the agent to make medical decisions for the person in question. In certain circumstances, the person may be incapacitated and incapable of making their own medical decisions, such as when they are in a coma. In such cases, the agent assumes the legal responsibility of making those decisions.
On the other hand, a financial power of attorney confers the agent with control over the person’s finances. This power of attorney can be utilized for various purposes during a person’s lifetime and is not exclusively associated with estate planning. For instance, if you are purchasing property in another country, you may grant your agent power of attorney specifically for that transaction.
These two types of power of attorney are managed by separate documents and can be assigned to different individuals.
There are two ways to determine when power of attorney becomes effective and when it ends. One is known as durable power of attorney, where the agent can immediately make decisions on behalf of the person. Durable power of attorney remains in effect until it is revoked by the creator of the agreement or until the person passes away. Power of attorney does not continue after death under any circumstances.
The other type is springing power of attorney, which offers more flexibility. Typically, a springing power of attorney becomes effective when a specific condition is met, such as when a doctor determines that the person is incapable of making their own decisions.
What Is an Executor of an Estate?
The role of an executor of the estate begins after the death of a person. If an individual has a will, their executor is usually aware of their designation and expects to assume the role. In cases where no will or estate plan exists, the Probate Court appoints an executor.
The executor’s duty involves ensuring that all outstanding debts of the deceased person are settled and that any inheritance is distributed appropriately. This position is formal and legal, with specific responsibilities.
How Do the Two Roles Differ?
The most significant distinction between the two roles lies in when they commence. Power of attorney can be established at any point in a person’s life and can be granted on a permanent or temporary basis. It is essential to consult with a lawyer to create a legally binding power of attorney.
In contrast, an executor of the estate’s responsibilities commence after the person’s death. Instead of filing paperwork with a lawyer, an executor must go through the court appointment process. If a will is in place, it likely includes a nomination for an executor, but the court must formally appoint the designated individual. In cases where no estate plan exists, the court appoints someone to fulfill this position.
Although these two roles share similar responsibilities, they are not interchangeable. The appointment of power of attorney does not guarantee the appointment of executor, and being named as an executor in a will holds no legal rights while the person is still alive. These positions are distinct and separate. During estate planning, it is crucial to consider who is best suited for each role individually.
Can One Person Perform Both Roles?
It is possible for one individual to assume both roles. Frequently, a spouse or adult child is granted both power of attorney and named executor of the estate. In such cases, there should be no conflict of interest between the two roles.
However, it is not uncommon to assign these roles to different individuals. As mentioned earlier, there are differences between the roles, and it may be more appropriate to assign power of attorney to one person while designating another as the estate executor.
Reach Out for Help If You Need It
If you are planning your own estate, consult with your lawyer to determine the best course of action for you. They can assist you in granting power of attorney, appointing an executor, or both. Additionally, they can evaluate your specific situation and provide personalized advice.
Moreover, if you are serving as an executor of a loved one’s estate, remember that you do not have to navigate the process alone. You can seek guidance from a lawyer or, if you prefer, use a website (like Atticus!) that offers a step-by-step guide to serving as an executor.