In estate planning, appointing trustworthy individuals to act on your behalf is vital.
The key roles are the estate executor and the agent with power of attorney.
These roles can be held by the same person but have distinct functions. Understanding these differences helps you choose the right individuals for the roles.
What Is an Executor of an Estate?
An estate executor manages the estate during probate, which involves filing the will, collecting assets, paying debts, and distributing to beneficiaries.
This role requires strong organizational skills, attention to detail, appraisals, decision-making, and extensive paperwork.
What Is Power of Attorney?
Power of attorney is a legal document granting an individual the authority to make decisions on behalf of another, typically when the latter is incapacitated. The person with power of attorney is often called the agent.
Two common types of power of attorney are general, which covers various financial and business decisions, and medical, which focuses on healthcare choices when a doctor deems the individual unfit.
Power of attorney can be durable (immediate) or springing (conditional), typically activated when a doctor confirms the individual’s incapacity.
Executor of Estate vs. Power Of Attorney: How They Differ
Power of attorney applies when you’re alive but incapable of making decisions, while an executor’s role commences after your passing.
Furthermore, their job descriptions differ. An executor has a specific task of ensuring there are sufficient funds to settle debts and distribute the remainder to heirs.
In contrast, an agent’s responsibilities are broader, spanning financial, legal, and medical decisions based on the granted power of attorney.
Can One Person Be Both an Executor of Estate and Power of Attorney?
It’s possible for one person to serve as both your agent and the executor of your will, often when selecting a trusted family member.
These roles don’t overlap, as power of attorney is effective during your lifetime, and executors take on their duties after your passing.
However, keep in mind that these are significant responsibilities.
Appointing the same individual for both roles can be demanding. If you have difficulty choosing suitable candidates, consulting an estate planning attorney is a helpful option.
Selecting your power of attorney agent and executor is crucial, as they’ll have significant responsibilities in handling your affairs during and after your life.
It’s vital to choose individuals you trust and consider highly competent. Keep in mind that these decisions will also profoundly impact your family after your passing.