Power of Attorney vs. Personal Representative
Not many people relish the idea of their death or planning for it. However, it is important to have your affairs in order early. Leaving your family or those you care about unprepared and unequipped to manage your affairs and administer your estate can create a hot mess and ruin relationships. There are two important seats to fill as part of an overall estate plan, both while you are living and after you are gone: Agent who acts under a Power of Attorney and a Personal Representative.
What is a Power of Attorney?
A Power of Attorney (“POA”) is the legal document that appoints a person to manage your financial or medical affairs if you cannot do so yourself. POAs are used when a person is unconscious, or has been declared incapacitated, or mentally incompetent. Certain types of POAs can also be used if a person is competent, but simply unavailable to handle a financial issue for themselves. A POA is a document that is in effect during your lifetime and are void upon your death.
The person who acts on your behalf under a POA is called an “Agent” or “Attorney-in-Fact.” This person acts as a fiduciary to you, meaning he/she owes you the highest duties under the law and must act in your best interest. Your Agent holds much power and responsibility, so it is essential to choose an impartial person with the utmost integrity. It is equally essential to have at least two alternate Agents listed in your POA in case your first choice later cannot serve in that role.
What types of Power of Attorneys Exist?
There are two main types of POAs used in estate planning in Idaho. The first is a Durable General Power of Attorney, which allows your Agent to manage your financial affairs. Such duties and responsibilities can include filing your tax returns, paying your bills, collecting money owed to you, depositing your checks, completing real estate transactions, and other sales and purchases on your behalf. Your Agent must act in your financial best interests.
Durable General POAs can come into effect in two situations. The first, known as an Immediate power, comes into effect the day you sign it. That means your Agent can act for you whether you are incapacitated (not of sound mind) or otherwise unavailable (out of town). The second, known as a Springing power, only allows your Agent to act for you if you are unconscious or deemed incapacitated/incompetent.
The second type of POA is a Healthcare Power of Attorney. This POA appoints an Agent to make medical decisions on your behalf or carry out medical decisions you have already legally made, only if you cannot communicate rationally. Your choice for Agent under this POA should be trusted family member or friend who understands your wishes and values. Under the Healthcare Power of Attorney, the Agent has the authority to make critical medical decisions, such as choosing treatment options, selecting healthcare providers, and making end-of-life decisions. It is vital to have a Healthcare POA in place to ensure your medical wishes are carried out.
Who Needs Copies of the POAs?
Once you have your Durable General POA and Healthcare POA completed and signed, keep the originals in a secure place in your home, such as a safe, to protect it from a fire or flood. You can provide copies of the POAs to your Agents and advise them where to find the originals. Doing so ensures your Agents are aware of your wishes and expectations of them.
You also have the option of providing a copy of your POAs to your financial institutions and health care providers. Doing so can ensure your Agent’s authority is already recognized and can eliminate any hassles your Agent could encounter.
Do my Powers of Attorney Expire?
Unless otherwise stated in the document, POAs do not expire. However, there are situations where the POA will become void and your Agent can no longer act on your behalf:
- If you change your mind for whatever reason and want to revoke it, your POA can be voided.
- If there is no Agent available, your POA will be void. This would happen if the Agent you appointed was deceased or incapacitated. Having successor or back-up Agents to serve will avoid this scenario.
- If the courts determine that you were not mentally sound when you signed the POA, it will be voided.
- If you named your spouse as your agent and then get divorced, it will automatically invalidate your ex-spouse as your Agent. However, your POA will still be in effect. If you named a successor/back-up Agent, that person will be named as your acting Agent. If you did not have a successor/back-up Agent, you will need to name a new Agent.
- Upon your death, your POA will be void.
How do I Appoint an Agent Under a Power of Attorney?
If you would like to appoint any type of Agent under a Power of Attorney, be it financial or medical, you should contact an attorney to discuss the process. The attorney will draft the Power of Attorney document and ensure that you understand what the document allows your Agent to do or not do. To create a POA, you must be of sound mind and have the mental capacity to sign legal documents.
What is a Personal Representative?
Unlike an Agent acting under a Power of Attorney during your lifetime, a Personal Representative (also known as an Executor) administers your estate after your death. The Personal Representative of your estate should be a person you trust, who can act as a fiduciary to carry out your wishes and the terms of your Last Will and Testament.
Roles of a Personal Representative
After your death, the first thing your Personal Representative will do to open your estate is to obtain legal authority to act on behalf of the estate. Your Personal Representative will submit a copy of your death certificate and original Last Will and Testament (if you have one) to the court. This will start the probate process. If submitted correctly, the court will open the probate matter and issue either Letters Testamentary (if you died with a Will) or Letters of Administration (if you died without a Will) to the Personal Representative. These documents act as the Personal Representative’s “license” or authority to administer the estate.
The Personal Representative is tasked with many duties during the estate administration. Those duties include identifying the assets and debts of the estate, creating an estate inventory, paying your debts and taxes, addressing appraisals, sales, or transfers of real estate, and ensuring the terms of your Will are carried out. If you die without a Last Will and Testament, the Personal Representative must follow the laws of intestate succession to administer your estate.
After the estate assets and debts have been inventoried, the Personal Representative is responsible for paying all valid debts. The debts are paid in full before assets are distributed to your heirs or beneficiaries. Once all debts are paid, the federal and state taxes are filed, and assets are distributed, the courts will close the probate estate. It is essential for the Personal Representative to act in a timely and responsible manner to settle the estate.
How Do I Appoint a Personal Representative?
Appointing a Personal Representative is one of the most important choices you will make in your estate planning process. To appoint a Personal Representative, contact an attorney to create a Last Will and Testament for you specifies who you want to serve in this role. Include at least two successors/back-up choices if your first choice either dies before you or cannot serve when the time comes. The person you select for this role should be someone who has a good understanding of your wishes and can manage your estate effectively. Be sure the people that you choose as your Personal Representative are aware that you selected them and are comfortable with the responsibility.
Contact an Attorney
No matter where you find yourself regarding the choices for these important fiduciary roles, it is essential to work with an attorney to ensure the work is done correctly and appropriately. Do you have questions about designating an Agent under a Power of Attorney or choosing a Personal Representative of your estate? Are you feeling overwhelmed because you are the Personal Representative of an estate and don’t know what to do next? Do you need to have Powers of Attorney, a Living Will, a Last Will and Testament, or a Trust created? No matter your situation, reach out to Johnson May Law. We are here to help you navigate the estate planning and probate processes to ensure your wishes will be carried out, your family will be protected, and your relationships preserved.Tags: