Executor vs. Power of Attorney: What’s the Difference
When creating an estate plan, individuals intend to prepare their assets for after their death. This allows them to ensure their possessions will continue to be cared for even after they are gone.
In estate planning, individuals typically appoint another person or people to help them care for these processes. Two of the most notable of these estate planning roles are your agent with power of attorney and the executor of your estate. To understand the differences, let’s dive into what each role involves.
What Is an Executor?
The executor of an estate is the individual responsible for managing the estate throughout the probate process, which is the legal undertaking of reviewing the assets of a deceased person and determining the inheritors. Assets may include financial holdings (stocks, bonds, money market investments), real estate, or even collectibles such as art and antiques.
Probate can be initiated with or without a will and involves:
- Locating and collecting all assets
- Paying off any debts associated with an estate
- Dispensing what remains to the correct beneficiaries
An executor should be extremely organized and detail-oriented. Overseeing an estate takes a lot of decision-making, paperwork, and appraisal. Other terms you may hear for this role include the will’s administrator, enforcer, or steward, or the testator’s personal representative, agent, or fiduciary.
If you want or need to remove and replace a designated executor, Levin Law Group can assist.
What Is Power of Attorney?
Power of attorney is legal documentation established by you, the “principal,” to allow a third party, the “agent,” to conduct transactions on your behalf. The agent usually begins making decisions for the principal when they have become incapacitated.
General power of attorney gives an agent the power to make a wide range of decisions encompassing financial matters, business transactions, retirement accounts, and beyond. Conversely, medical power of attorney is limited to an agent making decisions relating to the health care of someone a medical doctor has deemed unfit to make their own choices.
Power of attorney documents may be obtained online or through a law office. Legally, an attorney is not needed to draft a power of attorney document. However, to be legally valid, the document must follow the exact specifications of the law. Failure to follow the exact statutory requirements will result in the power of attorney not being accepted, so many people opt to use lawyers to simplify the process and avoid obstacles.
A power of attorney can end for a variety of reasons, such as when the principal revokes the agreement or dies or when the agent can no longer complete the outlined responsibilities. A court can also invalidate a power of attorney. A married couple who divorces may also determine the end of a power of attorney agreement if it is the principal and agent divorcing.
What Is the Difference Between an Executor and Power of Attorney?
The primary difference between the role of the executor and the agent is when the roles take effect. An executor’s legal responsibilities begin after you have died, while the power of attorney agent can make decisions while you are still living if need be.
An executor has a very specific and narrow job to accomplish: making sure there are enough funds in your estate to pay any debts, then distributing what remains to the heirs you have selected.
On the other hand, an agent has a wide range of responsibilities that may cover financial, legal, and medical decisions depending on what you initially decide to grant them the power to do.
Can the Same Person Serve as Both the Executor and Power of Attorney?
Yes. One person can serve as both the executor of your will and as your agent. Many people go this route and select a child or other trusted relative to fulfill both roles, as they do not overlap.
While deciding where to assign these roles, remember that each one carries a large amount of responsibility. If you’re struggling to come up with someone or no one in your family seems to be the right fit, you may want to consider using an estate planning attorney.
How Can I Learn More and Get Started with Designating an Executor and Power of Attorney?
The experienced lawyers at Levin Law Group in New York would be happy to meet with you for a free consultation if you are thinking about power of attorney and estate planning. Putting together a financial plan with an attorney who will care for you and your family is a wise decision.
Our New York law office can work with you to build and maintain a financial plan that meets your needs and brings you peace of mind. Our staff provides the highest quality legal advice and counseling to clients throughout New York and New Jersey. Contact us today to let us know how we can help you.