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Power of attorney and an executor: are they the same?

On Behalf of | May 17, 2024 | Probate and Estate Administration |

If you know someday you will help a relative oversee their estate, you should familiarize yourself with the roles that play a part in managing someone’s assets, especially if it is possible to confuse one role with another. This can be the case with an estate executor and a power of attorney.

Now is a good time to sort out how a power of attorney and an executor of an estate each work so you may plan appropriately for someone to handle each position.

How a POA works

Setting up a POA means giving someone power to handle your affairs while you are alive. A POA can come in different forms. With a financial POA, the designated agent manages your finances, pays bills and conducts transactions related to your assets and bank accounts. Meanwhile, a medical POA makes healthcare decisions for you if you become incapacitated.

POAs can be especially beneficial if they are durable, meaning they remain effective even if you lose mental capacity. However, the authority of your POA terminates upon your death.

How an executor functions

In contrast to a POA, an executor commences their duties after your death. You nominate an executor in your will to handle the administration of your estate. The executor gathers your assets, pays outstanding debts, files tax returns and distributes the remaining assets to your beneficiaries according to the provisions in the will.

When POA and executor roles combine

It is possible to appoint the same person to serve as both an executor and POA. This streamlines the decision-making process and ensures continuity in managing your affairs. However, it also concentrates significant power in the hands of one individual. By contrast, choosing two persons distributes the responsibilities and provide checks and balances.

If you have a relative who needs both a POA and an executor, help your family member consider the trustworthiness, capability and willingness to carry out the wishes of your loved one in the candidates for each role. This will help probate administration to go smoothly and avoid conflict between the individuals who manage your relative’s assets.