With all the information and different terms floating around, it’s easy to get overwhelmed when it comes to life and emergency planning. What documents are needed? Who do we speak to about medical documents? Legal documents? It can make your head spin!
And it’s the last thing you want to be dealing with in the middle of a personal or family emergency. So, the 820 Foundation is trying to demystify some of it for you, starting with the difference between an executor and a power of attorney.
What is an executor?
An executor is an individual named in your will who will act on behalf of your wishes in the event of your passing. The executor of your will can be a legal representative, loved one, or trusted individual who is made aware of your wishes and the details of your will. They act only in the event of your death, as opposed to a power of attorney, who can act while you are incapacitated.
People often choose a family member, trusted friend, or loved one as their executor, but you can also name a professional executor (i.e. a lawyer or legal representative). When deciding who to name as your executor, here are some questions to consider:
- Can your executor manage these responsibilities, conversations, and carry out your immediate wishes?
- Is your executor able to make funeral arrangements and close out any financial matters?
- Should you consider naming two executors?
- Does your executor live close? Are they able to travel quickly?
What is a power of attorney?
A general durable power of attorney both authorizes someone to act in a wide range of legal and business matters and remains in effect even if you become incapacitated. The document is also known as a durable power of attorney for finances. The POA can take effect immediately or can become effective only if you are incapacitated. A financial durable power of attorney only allows the agent to handle financial matters. It does not permit the agent to make decisions about the principal’s health care.
The person you appoint is known as your agent, or attorney-in-fact. An attorney-in-fact can handle many types of transactions, including:
- Buying and selling property
- Managing bank accounts, bills, and investments
- Filing tax returns
- Applying for government benefits
A medical power of attorney designates an individual to make healthcare decisions for you when you are not capable of making those decisions for yourself. When selecting a healthcare agent, ask yourself if that person:
- will be willing to speak on your behalf,
- will be willing to act on your wishes,
- lives close by or can travel if necessary,
- knows you well,
- will be able to handle the responsibility,
- will talk to you about sensitive issues,
- will listen to your wishes,
- will be available if necessary,
- will handle conflicting opinions, and
- will be a strong advocate for you.
While much of estate planning focuses on finances, a comprehensive estate plan should also help you prepare for any potential medical or healthcare decisions you may need to make in the future. That’s why a medical power of attorney, also known as a durable power of attorney for healthcare, is essential.
Both roles are extremely important, and it’s good to understand who is responsible for which tasks and at what point in a potential emergency. Having an executor doesn’t mean your wishes will be honored in the event of incapacitation, not without a medical power of attorney. And having a power of attorney does not directly translate to having an executor in the event of your passing. Having an executor, a power of attorney, and a medical power of attorney in place and named in your will and living will protects you in most circumstances and allows you to rest easily knowing you have people in place to honor your wishes, no matter what happens!
We are not providing legal advice. All estate planning varies from state to state. Please seek an attorney in your state for specific information and details.