Power of Attorney vs. Executor of Estate: Key Differences
- Appointing someone you trust to act on your behalf when you can't is important. Compare power of attorney vs. executor of state to understand key differences.
By planning your estate, you can ensure that your loved ones will be provided for financially after your death. Although an elder law or estate planning attorney can help you get your affairs in order, you can get additional peace of mind by appointing people you trust to act on your behalf after you die or if you become incapacitated. This can be accomplished by designating individuals for power of attorney and executor of estate. Before looking at the differences between these two roles, it’s important to understand the key responsibilities and rules of each.
Understanding Power of Attorney
The power of attorney is a legal tool that grants a designated individual or individuals the power to act on your behalf, either in general or for a specific purpose, such as a home sale. Depending on the document your lawyer draws up, POA may take effect immediately or be contingent upon a future event, such as a determination that you’re unable to act for yourself as a result of mental or physical incapacity. An individual may choose to assign financial or medical power of attorney, or both, and can define the limits of the power being granted.
Why Should You Give Someone Power of Attorney?
Although POA may grant extensive authority to the designated person, there are several compelling reasons you may want to consider giving someone this authority:
- Convenience: If you engage in numerous business transactions and don’t want to appear in person, you can use POA to grant someone else the right to stand in on your behalf.
- Travel: If you travel and are unable to make an appearance at a house closing or another in-person legal transaction, POA lets you designate someone who can take your place.
- Preparation for future events: If you’re concerned about possible future disability due to illness or accident, POA can let you designate someone you trust to handle your personal and/or business affairs if you become incapacitated.
- Peace of mind: Without a prepared power of attorney document, if you’re unable to act on your own behalf, you may not have the ability to choose a designated guardian. If a court must intercede, a judge will likely name a guardian or conservator for you and can define the limits of their power. By creating a POA document before you need it, you can choose someone you trust for the role.
Can Power of Attorney Be Revoked?
You can revoke the power of attorney at any time. This is usually done through a Notice of Revocation, which should be signed and notarized. Although revocation may also be accomplished by destroying all existing copies of the original POA, this method can be problematic and typically isn’t recommended.
After you revoke power of attorney, you should reach out to any financial companies, healthcare facilities or other institutions that have your original POA on file. If the document is recorded at your local Recorder of Deeds Office, make sure to record the Notice of Revocation there, too.
Understanding the Estate Executor
The executor of an estate is the person or persons responsible for carrying out the terms of a decedent’s will and/or wrapping up their financial affairs. An executor may be named in the will or appointed by a court if the decedent failed to name someone to the role.
Why Should You Name an Executor of Estate?
When you name an executor for your estate, you’re choosing the person who will manage your affairs after you die. Although executors are bound by fiduciary duty, meaning they must act in the estate’s best interest, regardless of potential personal benefit, naming an executor gives you the peace of mind that comes with appointing someone you trust. However, because an executor has the right to refuse this responsibility, it may be helpful to choose a successor executor, who becomes the executor of estate if your initial designee is unable to serve in the role.
Can an Estate Executor Be Removed?
If a request for removal is filed by a beneficiary, an estate executor may be removed by court decision for several reasons:
- Failing to administer the estate in a timely manner
- Failing to maintain accurate books and/or records of estate transactions
- Depositing estate funds into their private account
- Stealing or wasting estate assets
- Demonstrating bias or favor toward a beneficiary
- Engaging in criminal activities
Power of Attorney vs. Executor of Estate: Key Differences
Although you may choose the same person to have power of attorney and serve as estate executor, the responsibilities they’ll have in these roles are distinct. The key differences between these positions involve the timeline of duties and the overall job description.
Timeline of Duties
An individual who's been granted the power of attorney essentially stands in for a live person, as directed in the POA. This may be temporary or permanent, and it can be in a general capacity or for a single purpose. However, the POA’s responsibility always ends when the granter dies.
Although an estate executor may discuss the terms of a will prior to the death of the estate owner, they have no legal responsibilities until the individual passes away. Their role then continues until the administration of the estate is complete, they’re removed by the court or they resign or die.
Although the power of attorney and executor of estate are both assigned to manage an individual’s affairs, their job descriptions differ considerably.
An individual who has the power of attorney may make legal or financial decisions on your behalf. Depending on the legal document, the type of POA and your state of residence, this may include:
- Signing checks
- Signing contracts
- Giving monetary gifts
- Making healthcare decisions
- Selling or transferring assets or property
- Opening or closing bank and investment accounts
The executor of an estate has markedly different responsibilities, which may include:
- Paying creditors
- Inventorying assets
- Filing final tax returns
- Arranging care for pets
- Distributing death notices
- Disbursing assets and property
- Representing the estate in probate
Choosing an Executor of Estate or Power of Attorney
When you appoint an estate executor or designate someone to have the power of attorney, you’re granting them the right to manage your intimate affairs. Consequently, it’s important to choose someone who’s trustworthy, competent and responsible. For many individuals, this is a family member, such as a spouse or child, and you may want to assign the same person to both roles. However, because each role involves significant responsibility, you may want to consider appointing someone different for each job. You may also designate multiple individuals to fulfill each role, or name successors, who can take the place of your designee if they’re unavailable to carry out their responsibilities.
Neither power of attorney nor executor of estate requires special qualifications. However, the designee must be a legal adult who is mentally and physically capable of fulfilling the role. An estate planning or elder care lawyer can help you make an informed decision before drawing up legal documents.