Tuesday, October 06, 2009 Estate Planning Tip of the WeekWhat is the Difference Between a Power of Attorney and an Executor?
Literally, a lifetime of difference. Powers of attorney of all sorts are effective only during the principal’s lifetime, whereas an executor’s powers come into being only after the death of the principal.
Powers of attorney are documents whereby an individual (the principal) authorizes someone else (the agent) to act on the principal’s behalf. This could entail the agent’s signing papers to bind the principal to a contract, engaging in financial transactions on behalf of the principal, or in the case of an Advance Directive, declaring what medical treatment the principal would want, or not want, if the principal is unconscious or otherwise unable to communicate their medical wishes. Powers of attorney are important documents that can be invaluable if the principal is injured or falls ill. However, because many powers of attorney for finances are very broad, it is essential that the principal pick as an agent only someone that they have absolute trust in. Even though the agent has fiduciary obligations to the principal, a broad power of attorney in the wrong hands can cause all sorts of problems.
An executor is someone you name in your will to manage your probate estate. Because a will does not take effect until your death and your choice of executor must be approved by the Probate Court, an executor does not have any authority to act until after the probate process has been initiated. Choosing an executor, much like an agent, is an important issue. Executor’s should be detailed, fair-minded and conscientious, and someone who will carry out your instructions in your will as precisely as possible. |