Executors vs. Power of Attorneys
Providing clarity of responsibilities for the Executors and Power of Attorneys
Far too often, people think that the Power of Attorneys and Executors are the same thing. They have similar duties, but they think their function is the same way.
What is a Power of Attorney?
A Power of Attorney is a legal document. It is a designation where somebody allows you to make decisions for yourself. In other words, you can designate somebody else to be your healthcare Power of Attorney, so they'll make healthcare decisions for you.
You can designate somebody else to be your Financial Power of Attorney. They will make financial decisions for you. Now, that's very similar to an Executor. However, the Power of Attorney only works during life. Once someone passes away, then we need to look at the Executor.
Number one distinction between Power of Attorney and Executor:
The number one distinction that everyone needs to know about is the Power of Attorneys are during life while Executor is after death.
Answering your concerns:
What if you are concerned with your Power of Attorney and are saying, “Hey, I don’t want to designate somebody to be able to make decisions, go to my bank account, and take all of my money because I’m fully capable of doing that myself.”
Our team at Littlejohn Law would create what's called a Springing Power of Attorney.
What is a Springing Power Of Attorney?
What that means is the Power of Attorney only goes into effect at the time when you're incapacitated, or can't make decisions on your own. The key is that you must have these documents in place before you need them.
The other very important thing is the Financial Power of Attorney. It could be springing too.
But what about when someone passes away?
We need to find out who's the Executor under the Will. The Executor is a person who's responsible for gathering all the assets of their loved one. They are going to be responsible for paying all the bills. They are not personally liable for the bills but they're liable on behalf of the estate. In other words, if a bill comes to the estate, the Executor has to pay that bill on behalf of the estate. Again, the Power of Attorney, duties, responsibilities, and functions, only apply during life. Once someone passes away, we must look at an Executor to do the same thing. If you are designated as somebody's Financial Power of Attorney, you can access their bank account during life. You can pay their bills during life.
When they pass away, we must look at the Will to see who has been labeled their Executor. If you are their Executor, then you can continue paying bills. The only difference is the bills would be paid on behalf of the estate.
What can an Executor do? What can they not do?
When you look at your Will, you are going to want to see the specifics. A really good, drafted Will lays out a lot of specific duties that an Executor can handle. If it doesn't specify the specific task that the Executor wants to handle, then the Executor won't be able to do it without the probate court's permission.
Bob’s uncle passed away, and he was labeled as the Executor of the Will. He wanted to sell his uncle's property because the uncle who had signed a purchase agreement died before the sale was complete. Bob wanted to complete the sale.
The Probate Court immediately wanted to halt the sale on the basis that they didn't know what the Will said.
We had to present the Will to the probate court so they could see the specific power that authorized the sale of the real estate before the court approval.
Make it easy on your loved ones!
Make sure that your Will has a lot of information on what your Executor can and can't do. Can they sell a piece of property before they have to get a court order? It's not a bad thing if they could sell it beforehand. It's not a bad thing if they have to wait. It's just all very time sensitive.
Some clients have started to settle the process with the deceased. The deceased person signed the purchase agreement, the closing date was set, and then their loved one passes away. They want to be able to honor that purchase agreement. If they're not able to honor the purchase agreement, then the probate court would step in.
The only issue is that it takes time. The probate court takes time. They must make sure that everything is properly processed before they do anything. That is the biggest difference between the Healthcare Power of Attorney, Financial Power of Attorney, and the Executor is when the duties and functions take over.
Is the Executor liable?
The answer is no. An Executor is not liable for anything that they do as long as the Will states that there's no liability.
Now one caveat to that is an Executor must safeguard property. If you're labeled as an Executor
and you have real estate, or you have some sort of stocks or something, you're going to want to make sure that you maintain the value for the estate.
If it's a piece of real estate, you can't let it get dilapidated. You can't let it get torn down. You can't allow waste to occur. If you do, then the beneficiaries could come after you for liability because you have devalued the estate.
How are the beneficiaries of the Will notified?
That's the Executor’s responsibility. The Executor will notify the beneficiaries under the Will once the estate is opened up. Certain forms must be filed and submitted,
notifying the Executor about their duties and responsibilities. Also notifying the beneficiaries that they won't inherit until we get an order from the Probate Court, but that they are legally entitled to something.
Want to make a well-informed decision on how to handle your estate planning needs? Have questions on the responsibilities of Executor vs Power of Attorney, contact us at Littlejohn Law at 740-346-2899.
Littlejohn Law, LLC
The Real Estate and Probate Law Firm
352 Main Street
Wintersville, OH 43953
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And remember where there's a will, there's a way, and where there's no will. then there's probate.