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What is the Difference Between an Executor and a Power of Attorney?

estate planning, executor vs. power of attorney

Understanding the difference between an executor and a power of attorney is crucial when it comes to estate planning. While both roles involve decision-making authority, they serve different purposes and have distinct responsibilities.

What is an Executor?

An executor is an individual appointed in a Will to carry out the wishes of the deceased person (testator) after their death. Your executor’s primary role is to administer your estate, which includes tasks such as gathering assets, paying debts and taxes, distributing property to your beneficiaries, and managing any legal proceedings related to your estate.

What is a Power of Attorney?

A power of attorney (POA) is a legal document that grants someone else (the agent or attorney-in-fact) the authority to act on behalf of another person (the principal).

You as principal can grant various powers to your chosen agent, such as financial decision-making or healthcare decisions, and any other decisions related to your well-being or property. The powers granted can be broad or limited based on the specific terms outlined in the POA document.

What’s the Difference?

While an executor’s authority arises upon your death and applies specifically to your estate matters, a POA’s authority exists during your lifetime and can encompass broader aspects beyond just estate administration.

Additionally, a court typically appoints an executor through probate proceedings if there is no Will, if no executor was named in the Will, or if the person named is unwilling or unable to carry out their duties. In contrast, a POA is established by mutual agreement between the principal and agent without court involvement.

Continue Your Financial Legacy

You may be wondering how an executor or POA relates to your investments and your financial legacy.

On your passing, your assets, including your investments, will be distributed according to your Will. It is therefore important to specify precisely how you want your investments to be passed along in your Will so that your executor has clear instructions, and to choose an executor with the right level of investment knowledge to carry out your instructions.

Similarly, it is important to appoint an agent under a POA who is familiar with your long-term financial goals to ensure a seamless transition should the time come for them to make investment decisions on your behalf. This ensures your financial legacy is still attainable even if you are.

Since 1985 Bloom Investment Counsel, Inc. has provided personalized investment management services for wealthy individuals, family offices, foundations, corporations, institutions, and trusts. When it comes to your financial legacy, Bloom is pleased to partner with your other financial professionals such as POAs to ensure that you continue to build, protect and preserve your wealth.

This content is provided for general informational purposes only and does not constitute financial, investment, tax, legal or accounting advice nor does it constitute an offer or solicitation to buy or sell any securities referred to. Individual circumstances and current events are critical to sound investment planning; anyone wishing to act on this content should consult with his or her financial partner or advisor.

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