Planning for end of life can be more than a little intimidating. (Perhaps that’s why 76% of respondents in a recent survey thought having a Will was important, but only 40% had one.) Perhaps it’s because we are too busy thinking of the here and now to think of how things will be managed after our death. Those of us who have already granted a trusted person authority to manage certain matters for us by signing a power of attorney document might be breathing a little easier, because we assume that individual will continue to take care of things for us upon our passing. Unfortunately, that just isn’t the case since someone acting for you under a power of attorney document loses all authority to continue managing your affairs after your death. There are key differences between the roles of serving under a power of attorney document and an executor of an estate, and they’re important to understand to avoid confusion and costly delays in managing your estate.

Simply stated, a power of attorney (POA) is a document used to grant someone the authority to manage certain aspects of your finances or care while you are alive. When you sign a power of attorney document, you are known as the “principal,” whereas the person you name to manage your affairs is known as an “agent” or an “attorney-in-fact.” There are many types of POAs, depending what is needed. A general Power of Attorney gives broad financial and business responsibility to the named agent.  A special or limited Power of Attorney concentrates on a certain type of authority (examples are selling property or managing a specific business transaction).  A health care Power of Attorney authorizes a named individual to make medical care decisions for you when you are unable to.  A Power of Attorney can be non-durable (only valid so long as the principal has mental capacity) or durable (valid even after the principal loses mental capacity). A Power of Attorney also can be written to take effect only under certain circumstances, such as the principal losing mental capacity. That type of POA is called a “springing power of attorney.” Whatever the type of POA, they all have one thing in common – their power only exists while you are living and they become null and void at the time of your death. In other words, someone acting on your behalf under a Power of Attorney can no longer do so when you die. That’s where an executor comes in.