04 Jul Executor vs. Power of Attorney – What is the Difference?
Executor vs. Power of Attorney – What is the Difference?
They are both important positions for people to take on and can ensure that a person’s wishes are carried out. An executor helps someone to carry out their wishes after they die. A power of attorney enables a person to make decisions on their behalf while they are still alive.
An executor’s job is to act on behalf of your estate after your death. They take care of probate, pay your final taxes, and distribute your assets to your beneficiaries. they will administer your estate according to your last will and testament as per your final wishes.
A power of attorney has the legal authority to act on your behalf while you’re still alive but aren’t capable of handling your own affairs. They make decisions around care arrangements and personal and financial affairs.
Becoming an estate trustee for real estate purposes requires a thorough understanding of responsibilities of such a role, the legal processes and local real estate market.
The right support and guidance to ensure the settlement process runs smoothly and knowing the steps to follow, the first one being to obtain a Certificate of Appointment of Estate Trustee (probate court order). This order will give you the legal authority to act on behalf of the estate.
What is a power of attorney?
A power of attorney is a legal document that you sign to give one person, or more than one person, the authority to manage your money and property on your behalf. In most of Canada, the person you appoint is called an “attorney.” That person does not need to be a lawyer.
Among other requirements, you must be mentally capable at the time you sign any type of power of attorney for it to be valid. In general, to be mentally capable means that you are able to understand and appreciate financial and legal decisions and understand the consequences of making these decisions. However, the legal definition of mental capacity will vary based on the laws in each province or territory.
What types of powers of attorney are used in Canada?
The names and requirements for the different types of powers of attorney that deal with finances and property will vary depending on the province or territory where you live.
Generally, there are two main types of powers of attorney commonly used for finances and property in Canada:
A general power of attorney is a legal document that can give your attorney authority over all or some of your finances and property. It allows your attorney to manage your finances and property on your behalf only while you are mentally capable of managing your own affairs. It ends if you become mentally incapable of managing your own affairs.
A general power of attorney can be “specific” or “limited”, which can give authority to your attorney for a limited task (e.g. sell a house) or give them authority for a specific period of time. The power of attorney can start as soon as you sign it, or it can start on a specific date that you write in the document.
An enduring or continuing power of attorney is a legal document that lets your attorney continue acting for you if you become mentally incapable of managing your finances and property. It can also give your attorney authority over all or some of your finances and property. An enduring or continuing power of attorney can take effect as soon as you sign it. In some cases, it is possible to have the power of attorney come into effect only when you become mentally incapable, if this was specified in the document.
What can my attorney do?
Unless you limit your attorney’s authority, they can do almost everything with your finances and property that you could do. If you don’t have any limitations in your power of attorney document, your attorney can do your banking, sign cheques, buy or sell real estate in your name, and buy consumer goods. Your attorney does not become the owner of any of your money or property. He or she only has the authority to manage it on your behalf.
Your attorney cannot make a will for you, change your existing will, change a beneficiary on a life insurance plan, or give a new power of attorney to someone else on your behalf.
In most parts of Canada, it is possible to prepare documents that give another person the authority to make health and other types of personal and non-financial decisions for you, if you were to become mentally incapable of doing so for yourself. Depending on where you live, these documents may be called powers of attorney, personal or health directives, representation agreements, or mandates.
These documents are not the same as powers of attorney for finances and property. It is important to be clear about what type of document you are signing.
Once you pass away, the attorney’s job is over. Your assets and estate are still yours, which means that once it’s time for an executor to step in, the attorney is no longer involved in your affairs.
If your attorney and your executor are the same person, then it’s just a matter of one job ending and another beginning.
Sources: Willful, Government of Canada