What is the difference between a Power of Attorney (property) and an Executor?
This is a topic that comes up a lot, I will be at an event and the topic of what I do comes up and the next words I hear are….”oh, yeah I am my (insert family member relationship) Power of Attorney.” This will prompt a little more detail into the conversation, in which I discover that they are not the Power of Attorney….. but instead the Executor, which leads to another question…..”What is the difference?”
Think of a Power of Attorney of Property (which I will call “POA “in the remainder of this article) as one type of job description, and an Executor as an entirely different job description. While they may have some duties that seem similar, they are not the same thing.
Let’s begin with a POA:
A Power of Attorney for Property is used for reasons of illness, absence or a person is unable to care for his/her own financial affairs. The authority given to the POA is so that they can manage the person’s affairs on their behalf.
- A Power of Attorney document is to be used while the person is still alive and is triggered upon the specific reason the document was implemented for. An example is a “Limited Power of Attorney” this could be used in the situation that someone is leaving the country for an extended period of time and requires their home to be sold while they are away. The POA document would list the specific purpose, property and time period in which the appointment is in effect for.
- In order to have capacity to give a Power of Attorney there are requirements that must be met, some of these requirements are: The person must be over the age of majority, knows and understands the kind of property he/she has and approximate value, is aware of their obligations to their dependents, knows that the POA will be able to do anything on the person’s behalf (except for the items listed in the next point), knows that they can, if capable revoke the POA.
- A power of Attorney CANNOT: Make a will on the person’s behalf, change the will on the person’s behalf, ignore the restrictions set out in the document, make secret profits, act contrary to the interests of the donor (the person the POA is for) or delegate their discretionary powers.
- A Power of Attorney ends upon the following circumstances: death of the donor -the will now kicks in and the Executor takes up appointment, termination date, or revocation.
Moving onto an Executor:
- An Executor is the person appointed within the will who has the responsibility of administering the estate of a deceased person. Depending on the assets held within the estate, the Executor must apply for a Certificate of Appointment to administer the estate.
- A will can be either in “English Form” which is executed in the presence of at least two witnesses together at the same time or a “Holograph Will” which is written entirely in the handwriting of the testator and signed by the testator without witnesses.
- Some duties of the Executor are: To carry out direction, be honest and prudent, preserve and protect assets, maintain an even hand, maintain accurate accounts, not to profit and not to delegate.
- There can be hundreds of tasks in the administration of the estate some of these tasks can be: locating the will, assembling and protecting the assets, filing tax returns, paying liabilities, collecting and distributing income, distributing assets to beneficiaries and providing detailed accounting.
- A person must be of age of majority to create a will and understand that he/she is making a will, understand the nature of their assets, recall the persons normally expected to benefit from their estate and understand the extent of the property he is giving to each beneficiary.
As you can see, these are only some tid-bits to help gain a little more insight and clarification on the differences between a Power of Attorney and Executor.