3 minute read
The Difference between Power of Attorney and Executor
By SARAH LYONS
One of the most important aspects of estate planning is deciding who will be in charge of your affairs when you are unable to be.
You will want to protect what you have earned and accumulated throughout your life. This can be accomplished through trust agreements and a well-written will. Management of your estate during and after your death should be delegated to a trusted family member, friend, or professional.
Many people choose a power of attorney or an executor. One person can do both of these duties, but understanding the difference between the two roles is important for assuring your estate is managed according to your wishes and helping you choose the right person or people for the jobs.
What is a Power of Attorney?
A power of attorney is a legal document authorizing someone to act as an attorney or agent on behalf of you, the grantor. Someone with power of attorney is often referred to as an agent.
There are different types of powers of attorney that give one person (the agent or attorney-in-fact) the power to act for another person:
• A limited power attorney only allows the agent to act on the grantor’s behalf within very specific perimeters. This person may only be allowed to sign on your behalf during a specific and limited timeframe. A limited power of attorney can only act or make decisions on someone’s behalf for specified activities and only to the point that the principal authorizes.
It is generally valid for no more than 90 days.
• A durable power of attorney gives the agent the ability to act on your behalf even if you’ve been incapacitated.
• A springing power of attorney goes into effect when the grantor is incapacitated and unable to make decisions on their own. It is important to define what classifies a person as incapacitated in specific terms so it is clear to all parties. What is an Executor?
Whereas the power of attorney’s responsibilities occur while the grantor is alive, an executor’s duties begin only after the death of the will holder.
The executor is in charge of executing the will, taking care of the estate during the probate process, notifying creditors, consolidating assets, and managing finances. The executor can be a family member or an attorney, and the role and duties of an executor can vary depending upon how the estate plan is set up.
The main difference between a power of attorney and an executor is whether the grantor is alive or not. The power of attorney represents you while you are still living but need assistance, and the executor manages the estate after your death. The two are never actively representing you at the same time, although both of these jobs can be performed by the same person if you choose.
It is also important to understand that when making plans for your estate, the designated beneficiary on the account at your bank or life insurance policy will take precedence over what is stated in your will.
Many people make the mistake of not planning ahead or putting off completing their estate planning. It is always best, no matter your age or circumstances, to have your affairs in order, current, and updated.
Consider who you would like to represent you as a power of attorney and executor, and educate yourself on the differences between the two. You have the opportunity to make sure your affairs are handled the way you desire. Don’t procrastinate when it comes to something that is so important.
This is not meant to replace legal advice; please consult a lawyer for more in-depth clarification.
