Executor of a Will Vs Power of Attorney: What’s the Difference?

Estate planning is far from the easiest task you will ever attempt. In addition to the emotional aspect, the process itself can be confusing. Executor, Estate Trustee, Power of Attorney, what do they all mean?

When you think you’ve got a handle on it, another wrench gets thrown into the system. What kind of Power of Attorney, and when does this authority begin? In this post, we will shed some light on the differences between an Executor and a Power of Attorney.

(Obligatory disclaimer: Remember that we are real estate agents, not lawyers. As such, please use this article for information purposes only, and seek advice from an experienced attorney for your personal situation.)

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Is It an Executor or Estate Trustee?

“Executor” is the traditional term for the individual who handles the deceased’s estate after they have passed away. In the past, you may have encountered “Executrix,” as well, just to add even more confusion to the mix.

The most current and inclusive term is now “Estate Trustee.” However, many people still use the word “Executor.”

The person who appoints an Estate Trustee is called a Testator, or, more modernly, a Will-maker. In the event someone passes away without a Will, they are considered “intestate.” Now, instead of an Estate Trustee, there’s an Administrator, sometimes called “Estate Trustee Without a Will.”

An Estate Trustee is granted power by the presence of a valid Will, whereas an Administrator is appointed by the courts and will have to follow Ontario’s guidelines for succession.

If you or a loved one has very specific wishes about how your assets and heirlooms are distributed, you must create a Will, preferably with the help of an experienced attorney. Otherwise, that old cliche about a long-lost and estranged relative showing up after death could potentially become reality.

Do you want more clarity on the role of the Executor in estate planning? Here are some other resources that can help:

Power of Attorney

Like an Estate Trustee, a Power of Attorney (POA) has the authority to make decisions on behalf of someone else. The big difference is in the timing. An Estate Trustee’s authority begins after death; a Power of Attorney acts while the grantor (the person who assigns the role) is still living.

So far, so good, but now, things are about to get more complicated. Not just because there are two different categories of Power of Attorney (which may or may not overlap), but they also spring into effect at different times.

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Power of Attorney for Personal Care

In real estate, this is the type of POA we talk about the least. It can be critically important, but it’s less applicable in terms of managing financial assets.

The authority of Power of Attorney for Personal Care begins if the grantor becomes mentally incapable. If this happens, the POA will step in and make vital decisions about housing, medical care, and hygiene.

It gets complicated because often, the grantor can make decisions in one aspect while being incapable of another. Before POA comes into effect, a doctor may suggest a review of capacity. If there is any dispute, a designated capacity assessor (such as a doctor, occupational therapist, psychologist, nurse or social worker who has completed the required extra training) can professionally evaluate the grantor’s ability to understand and fully grasp the consequences of a decision.

Though it’s beyond the scope of this post, Power of Attorney for Personal Care can be an essential part of estate planning.

To put it in perspective, let’s say you’ve had a falling out with your next of kin. Without proper documentation in place, they might end up making life-changing decisions on your behalf. To avoid that nightmare scenario, be sure all of your wishes are documented and legally sound.

Once you have the paperwork in order, the process of selling a house for someone else becomes relatively straightforward. The posts below will help streamline your next transaction:

Power of Attorney for Property

This type of Power of Attorney is most applicable to real estate. Once the grantor legally appoints a POA, that individual can make decisions about their finances and investments. In addition, they can buy and sell property on the grantor’s behalf – but they are under fiduciary duty to act in their best interests.

When the authority begins is a primary distinction between Power of Attorney for Personal Care and POA for Property. For personal care, it only comes into effect if the grantor becomes mentally incapacitated.

Continuing POA Vs Non-Continuing for Property

Unless otherwise stated, POA for Property begins immediately. You’ll also need to decide between “Continuing” and “Non-Continuing” Power of Attorney.

Under Continuing, your POA will continue to act on your behalf if you become incapacitated.
Non-Continuing means their authority ends if you are no longer able to make your own decisions. (People also choose this path if they need someone else to perform a specific task. Once that project is complete, the POA ends.)

Understanding these nuances is critical during estate planning. Otherwise, you might plan for someone else to step in, only to find their powers limited when you need them the most. Or your adult child might start managing your finances before you’re ready.

We recommend working with an experienced estate planning attorney to guide you when deciding on who should be your Executor and Power of Attorney. You might choose different people for each role. Alternatively, the same person could perform all tasks.

What matters is that you fully understand what power someone else will have and when. For example, if you only want POA for Property to kick in if you become incapable, your attorney might suggest adding a springing clause. (This term means a legal agreement won’t be valid until a specific trigger occurs.) In Power of Attorney, it’s usually incapacity, but it could be another event.

Your lawyer will be able to guide you so you create a document that accurately reflects your wishes. By choosing someone you trust to advocate for you at the right time and with clear instructions, you can rest assured knowing that you and your loved ones are protected.

Do you have more questions about the role of an Executor or POA in real estate? Our Peterborough real estate agents are happy to guide you. Reach out to team@jeffandkatie.ca or call 705-243-9797 to start the conversation today.