It's easy to get confused about the difference between power of attorney and executor of the estate. Both handle financial matters for someone else. The biggest difference between the two is that someone with power of attorney handles things while the person is alive, while the executor of the estate handles things after the person has died.
What Is Power of Attorney?
Power of attorney is a legal document that gives one person (usually known as the agent) control over certain decisions about and for another person.
While the term is broadly used culturally, there are actually several different types of powers of attorney.
The two most common are a medical power of attorney and a financial power of attorney.
A medical power of attorney gives the agent control over medical decisions made for the person in question. In some cases, the person may be unable to make medical decisions for themselves (for example, if they're in a coma). In those cases, the agent has the legal responsibility to make those decisions.
A financial power of attorney gives the agent control over the person in question's finances, so they can make financial decisions on behalf of the person. This sort of power of attorney can be used for many different things during a person's life and isn't exclusively associated with estate planning. For example, if you're purchasing property in a different country, you might provide your agent there with power of attorney only in regards to that purchase.
These two types of power of attorney are handled by different documents and can be assigned to different people.
Because each of these powers of attorney authorize another individual with considerable legal power or decision-making, it's important to establish when a power of attorney begins, as well as the timeframe or duration of its effect.
There are two different ways to establish when power of attorney will begin and end. One is called durable power of attorney. In this type, the agent can immediately begin making decisions for the person. A durable power of attorney only ends if the person who creates the agreement either revokes it or dies. Under no circumstances does power of attorney continue after death.
The other type is springing power of attorney. This can be provided on a more flexible basis. Typically, a springing power of attorney begins when a certain condition is met, like when a doctor determines that the person is unable to make their own decisions.
What Is an Executor of an Estate?
An executor of the estate's job doesn't start until after a person's death. If a person has a will, their executor probably knows ahead of time and is expecting to take on the role. If there's no will or estate plan in place, the Probate Court will appoint an executor based upon the local intestacy laws where the individual lived.
In either situation, the executor's job is to make sure that all of the deceased person's debts are paid and that any inheritance is properly distributed to rightful heirs. This is a formal, legal position with specific responsibilities.
How Do the Two Roles Differ?
The biggest difference between the roles is when they begin. Power of attorney can start at any time during a person's life, and it can be provided on a permanent or temporary basis. You need to consult a lawyer to create a legal power of attorney.
Serving as the executor of an estate, on the other hand, begins after death. Instead of paperwork filed with a lawyer, an executor needs to be appointed by the court. If there's a will in place, it probably contains a nomination for executor, but the court needs to formally appoint that person to be executor. If no estate plan is in place, the court will appoint a person to serve in that position.
Useful Article: Petitioning the Court to Start Probate
Having power of attorney may involve making some difficult decisions about health matters, and this can be stressful on the person in the role. Serving as executor may involve difficult financial decisions, but there are no health decisions that must be made.
It's important to realize that, although these two jobs fulfill similar roles, they're not interchangeable. Just because someone has been given power of attorney doesn't mean that they're necessarily going to be appointed executor, and being named as executor in a will doesn't provide any legal rights while the person is still alive. They are two separate and distinct positions. During estate planning, it's important to consider who is best suited for each role individually.
Can One Person Do Both?
It is possible to serve in both roles. In a lot of cases, a spouse or adult child is given both power of attorney and named executor of the estate. There should be no conflict of interest in doing both.
However, it's not uncommon to assign the roles to two different people. 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.
Another Relevant Article: How to Choose the Executor of Your Estate
Reach Out for Help If You Need It
If you're planning your own estate, consult your lawyer to see what makes the most sense for you. They can help you with giving someone power of attorney, naming an executor, or both. They'll also be able to evaluate your specific situation and provide you with personalized advice.
And if you're serving as executor of a loved one's estate, you're not alone in the process. You can speak with a lawyer, or, if you prefer, you can use a product like Atticus to access step-by-step guidance, local forms and helpful tools throughout the process of serving as an executor.
