Even if it’s not on your radar right now, you will eventually be unable to manage your own personal and financial matters at some point. This could happen for a number of reasons, such as health problems, unplanned events in your life, or, unfortunately, your death. Even after that day, you still need to manage your assets, make your payments, and pay your taxes. It’s important to think about who should be the executor of your will (or trustee of your trust) and to whom you’ll give a durable power of attorney. There are many people who could be involved in your estate plan. While you can even select the same person to serve in both roles, their responsibilities will differ. This piece focuses on the difference between an executor and a power of attorney (power of attorney vs executor) and why they’re crucial in will and estate preparation.
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Overview
It’s easy to become confused about the distinction between a power of attorney and an estate executor (power of attorney vs. executor). Generally, both take care of someone else’s financial affairs. The primary distinction between the two, however, is that a power of attorney is used while the principal is still living, whereas an executor of an estate is used when the principal has passed away.
You can even select the same person to serve in both roles, but their responsibilities will differ. Both an executor and a person with power of attorney are crucial in estate preparation. While someone with power of attorney can make financial and medical choices on your behalf while you’re alive, including when you’re incapacitated, the executor settles financial matters and manages the probate process after you pass away.
In addition, both the executor of your estate and the holder of a power of attorney is legally obligated to serve in your best interests with regard to the matters you’ve chosen. A final will and testament and a power of attorney (POA) document, respectively, are used to create the roles of executor and attorney-in-fact.
What is an Estate Executor?
An executor is basically the person in charge of overseeing an estate during the probate procedure. The act of submitting the decedent’s will to the relevant probate court, finding and gathering all the assets, settling off all debts linked with the estate, as well as distributing whatever’s left to the right beneficiaries constitutes the probate procedure.
The process of guiding an estate through probate requires a lot of analysis, judgment, and paperwork. Hence, the executor needs to be extremely organized and detail-oriented.
What is Power of Attorney?
A power of attorney is a legal document that grants one person (often referred to as the agent) authority to make decisions on another person’s behalf.
Powers of attorney come in a variety of forms. The two most popular ones are financial and medical powers of attorney.
#1. Medical Power of Attorney.
With a medical power of attorney, the agent is in charge of the patient’s medical decisions. In other circumstances (such as if they’re in a coma), the person might not be able to make medical decisions for themself. The agent is obligated by law to take certain actions in those situations.
#2. Financial Power of Attorney
A financial power of attorney, on the other hand, gives the agent control over the principal’s finances so that the agent can act on behalf of the principal. This kind of power of attorney isn’t just used for buying and selling real estate. It can also be used for many other things throughout a person’s life. For instance, if you’re buying real estate abroad, you might give your realtor their power of attorney just for that transaction.
These two varieties of powers of attorney are handled by separate legal instruments and may be given to other parties.
There are two ways to specify the beginning and ending dates of a power of attorney. A durable power of attorney is one. In this case, the agent can start making decisions for the person right away. A durable power of attorney remains in effect until revoked or until the creator of the document passes away. Power of attorney does not, under any circumstances, last after death.
The other kind is a power of attorney that springs to life. This can be offered with additional flexibility. A “springing power of attorney” often starts when a predetermined requirement is satisfied, such as when a medical professional finds that the person is incapable of making choices for themselves.
What is the Best Form of Power of Attorney?
The agent’s authority under a general power of attorney is generally broad. So, this is the ideal course of action if you want to give the designated individual as much discretion as possible over your finances and care. With a limited power of attorney, on the other hand, the agent can only handle certain assets.
Executor of Estate vs. Power Of Attorney: The Difference
The primary distinction between an executor and an agent is the initiation of their respective responsibilities. Your ability to make decisions for yourself while you are still alive makes power of attorney relevant. After your death, your executor on the other hand will be responsible for carrying out your wishes.
Even though both jobs involve taking care of your business when you can’t, each has a slightly different job description. Making sure there is enough money in your estate to pay off any debts and then distributing the remaining funds to your heirs is the exclusive responsibility of your executor. In contrast, the responsibilities of your agent are more varied. Depending on which areas of your life you’ve been given power of attorney over, the role may entail making decisions regarding financial, legal, and medical matters.
Power of Attorney Vs. Estate Executor- Pros and Cons
In addition to some of the differences between an estate executor vs power of attorney explained above, here are some of their pros;
Estate Executor- Pros
- Has no power to make decisions or control the primary party’s assets while they are still alive.
- Must act in the estate’s best interest and exhibit the care and expertise a normal person would exhibit.
Power of Attorney- Pros
- Within a set of limitations, legal control over the decision-making of the principal party
- Regular/broad POAs simply let someone act on your behalf in the same manner as you would, but never represent you.
Estate Executor- Cons
- Executor duties might take up a lot of time, depending on the size and complexity of the estate.
- It is possible to claim damages if carelessness or breach of duty can be proven.
Power of Attorney- Cons
- Agents often conduct things that go against the wishes of their principals.
- The agent’s actions are not supervised by anyone other than the principal.
- There is a chance that third parties like banks or other financial institutions, will reject a power of attorney.
Power of Attorney Vs Executor of Estate- Can One Person Do Both?
Absolutely. The same person can perform both functions. In many situations, an adult child or spouse is appointed as executor of the estate and also given power of attorney. Both tasks should not interfere with one another in any way.
However, it’s not unusual to divide the duties between two people. Because of the distinctions between the two roles (power of attorney vs. estate executor), it may make sense to grant power of attorney to one individual while designating another as the estate’s executor.
How do I Get Power of Attorney in PA?
- Create a PoA – Just respond to a few questions, and your agent can take care of the rest.
- Before sending or disclosing, consult your agent or a legal professional.
- To make your signature legally binding, have it witnessed and notarized whether or not it is required to do so.
Also, this choice will usually save both time and money compared to hiring and working with a traditional lawyer. This power of attorney can also be used to fill out paperwork on behalf of a spouse, parent, or other family members if necessary.
However, keep in mind that a Power of Attorney is only legitimate if signed by a principal who is of sound mind. In most cases, a conservatorship is necessary if the principal is already incapacitated and unable to make choices for themselves. Consult an attorney as soon as possible if you find yourself in this position.
How Much Does a POA Cost in Pennsylvania?
In Pennsylvania, how much it generally costs to obtain a Power of Attorney form may vary. Depending on where you live, the costs for engaging a lawyer to draft a power of attorney could range from $200 to $500.
Does a Power of Attorney Need to Be Recorded in PA?
It is not necessary to file a copy of your POA with the Orphan’s Court Division of the Court of Common Pleas, although you can if you like. Your power of attorney can be recorded in your county’s deed registry if it will be used to make real estate decisions.
What Does Power of Attorney Allow You to Do?
A power of attorney authorizes another person or persons to take legal action on your behalf. The authority’s scope can be narrowly defined to include only a certain task, like completing the sale of your home, or it can be more broadly applicable. In addition, it’s possible that the granted power will be permanent, or at least not revocable.
Power of Attorney vs Executor of a Will
An attorney-in-fact under a power of attorney has different responsibilities than an executor under a will. Hence, this distinction ( will executor vs power of attorney) needs to be made clear while drawing out your estate plan. Even though both ( will executor vs power of attorney) involve delegating authority to another person, the tasks required of each are distinct and occur at separate times.
Who are the Executors of a Will?
An executor is one who is appointed to carry out a will’s directives and wishes. This person may also be the executor of the will, the estate’s guardian, or the testator’s personal representative. The term “executrix” is used when referring to a female executor.
Who is Best to Be An Executor of a Will?
An executor can be anyone who is legally able to do so. However, the most common choices for executors are a spouse or civil partner, followed by a child. An individual must have at least one executor who is at least 18 years old in order to apply for probate, the legal document that grants the power to settle a decedent’s financial and legal matters.
Power of Attorney vs Executor of a Will- The Difference
The main distinction between an executor and an attorney-in-fact is that the latter’s authority to act on behalf of the principal only exists while the latter is still alive. Following death, all authority to administer the decedent’s estate falls to the executor designated in the will. Your POA basically ends the moment you pass away, and the will executor’s authority starts when your Will takes effect.
If you are unable to make decisions for yourself due to a mental or physical disability, a power of attorney will likely be put into effect. In this scenario, your attorney-in-fact will be able to make important choices on your behalf. These also include those pertaining to your health and finances. But once you die, your desires, as stated in your will, will be carried out by your executor.
Who is an Executor in Inheritance?
The person who settles the financial affairs of a deceased person is the executor of an estate. If the decedent left a will, it typically appoints a close relative, friend, accountant, lawyer, or financial institution to serve as the executor.
Can Executor Be Beneficiary in Will?
Your estate plan should include naming an executor as a key component. A will executor is in charge of managing the probate procedure and allocating the assets to your beneficiaries. So, if you’re asking if a will’s executor can also be a beneficiary, the majority of the time, the answer is yes.
Can the Executor and Beneficiary Be the Same?
Do the roles of executor and beneficiary have to be separate? To answer your question, a Will can specify the same individual as both the executor and the beneficiary. It’s absolutely normal and lawful.
Will Executor Vs Power of Attorney- Can it Be Same Person?
Sure. You may name the same individual to carry out your Will and function as your attorney in fact. This path is generally favored by many because it facilitates a smooth transition from having someone else make decisions for you during your lifetime to having those desires carried out after your death. If a person is unable to handle their own financial affairs due to illness or death, their spouse or adult child can step in. They will help make decisions on their behalf and later act as executors of their will.
Conclusion
Both your agent under a power of attorney and your executor play crucial roles in handling your business after you die. As a result, it’s crucial to select those you have complete faith in and consider to be really qualified. Be sure to choose wisely, as these individuals will have a lasting impact on your loved ones even after you’re gone.
You can even select the same person to serve in both roles, but their responsibilities will differ. Preparing an estate requires both an executor and a person with power of attorney. While someone with power of attorney can make financial and medical choices on your behalf while you’re alive, including when you’re incapacitated, the executor settles financial matters and manages the probate process after you pass away.
Power of Attorney Vs Executor FAQs
What has the power to trump a beneficiary?
The wills of the deceased will specify the beneficiaries who will receive assets. But because of their legal duty, an executor may not care about what these beneficiaries want.
Can an executor make distribution decisions?
No. The Executor has no authority to allocate property. The executor’s job includes, but is not limited to, distributing your assets as specified in your will. It is the executor’s duty to grant the wishes of the beneficiaries, so long as doing so does not violate the fiduciary duty owed to the estate.
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- CREATING A WILL: Step-by-Step Guide
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