One of the most crucial aspects of estate planning is appointing people you trust to step in for you when you can’t act for your self. Two of the most prominent of these roles are the executor of your estate and your agent with power of attorney. The two roles may be filled by the same person, but they themselves are very different. Knowing the differences between them can help you make the exact right decisions on who should fill those roles.
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What Is an Executor of an Estate?
The executor of an estate is the person in charge of managing the estate throughout the probate process. The probate process is the act of filing the deceased’s will with the appropriate probate court, locating and collecting all the assets, paying off all debts associated with the estate and distributing what’s left to the proper beneficiaries.
The executor must have strong organization skills and attention to detail. Shepherding an estate through probate involves a good deal of appraisal and decision-making, as well as a lot of paperwork.
What Is Power of Attorney?
Power of attorney is a legal document that gives an individual the authority to make decisions on behalf of someone else, often when the latter person has become incapacitated or is otherwise unable to make her own decisions. Someone with power of attorney is often referred to as the agent.
There are a few different kinds of power of attorney. The two most common two varieties are general power of attorney and medical power of attorney. General power of attorney gives an agent the power to make a wide range of decisions on financial matters, business transactions, retirement accounts and more. Medical power of attorney is more narrow. An agent with medical power of attorney can make decisions about the health care of someone who a doctor has deemed unfit to make their own decisions.
Power of attorney can be either durable or springing. If you sign a document giving durable power of attorney, your agent can immediately start making decisions on your behalf. With springing power of attorney, your agent will assume authority only once certain conditions occur. Most frequently, this condition is if a doctor concludes that you’re incapacitated or otherwise unable to make your own decisions.
Executor of Estate vs. Power Of Attorney: How They Differ
The most salient difference between the executor and the agent is when the two roles take effect. Power of attorney is relevant to situations in which you are alive but unable to make your own decisions. Your executor’s duties begin only after you have died.
Additionally, the job description for each role is slightly different, even though both deal with managing your affairs when you can’t. Your executor has a very specific and limited job to do: Making sure there’s enough money in your estate to pay off any debts and then channeling the rest to your heirs. Your agent, on the other hand, is more wide-ranging in their duties. The job could involve ruling on all kinds of decisions – financial, legal and medical – depending on what aspects of your life you’ve granted power of attorney over.
Can One Person Be Both an Executor of Estate and Power of Attorney?
One person can serve as both your agent and the executor of your will. This is not uncommon, especially if you’ve chosen a child or other trusted relative for the roles. The two roles won’t overlap. Power of attorney is only effective while you’re alive and executors only assume responsibilities once you pass away.
However, you should keep in mind that these are both big jobs with a lot of responsibility. Appointing the same person to both roles may be asking a lot of him or her. If you find that you’re struggling to think of people to appoint, you may want to consider looking for an estate planning attorney.
Your power of attorney agent and executor will play key roles in taking care of your affairs at the end of your life and beyond. Consequently, it’s paramount that you choose people who you trust and believe to be highly competent. Additionally, make these choices very carefully, as these people will also have a large effect on your family after you’re gone.
Tips for Planning Your Estate
- Before you start thinking about estate planning, it’s a good idea to put together a financial plan. This can help ensure your family is taken care of when you’re not around. A financial advisor can build and maintain a financial plan that meets your needs. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- Your agent may have to make decisions about your 401(k) account. Find out how much money you’ll have in your account by the time you retire with our free 401(k) calculator.
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