There are several powerful tools in the estate planning toolkit, among them wills and powers of attorney. But there can be confusion about what each does, if people need just one or both, and if one has power over the other. Read on for what you need to know.
What Is a Power of Attorney?
A power of attorney (POA) is a legal document that can allow someone to make financial or medical decisions on your behalf when drawn up correctly. There are several different kinds of POAs. Some go into effect as soon as they’re signed and witnessed, even when the person drawing them up is still alive. These are especially useful for business transactions, such as when someone wants to sell or buy property in another state without actually traveling there. They can appoint someone to handle the transaction on their behalf through a POA.
There are other types of POAs that are designed to go into effect when the person who had them drawn up becomes incapacitated and can no longer make decisions for themselves. These are often used for medical situations where someone wants to specify treatments and medications they would or wouldn’t want, especially at the end of life.
What Is a Will?
A will is a different type of legal document from a POA. It’s designed for the person who owned the estate (known as the testator) to clarify what should be done with the estate after the testator passes. A will can also be used to name minor children or pets’ guardians. Without a will, the estate would go to court after the estate owner dies. The court determines how the assets will be distributed and, if applicable, who will become responsible for any minor children or pets. What the court chooses could significantly differ from what the testator would have wanted.
When drawing up a will, the testator should name an executor. That person will be responsible for ensuring the estate is appropriately closed out, including paying any outstanding bills or taxes; distributing the assets according to the will’s terms; and guiding the will through to handle any remaining matters, including guardianship.
What Is a Living Will?
A living will is an advanced health care directive in California. It’s a document that has both a POA and a will. The purpose of this document is to allow someone to specify the medical treatments and medications they do or don’t want should they become incapacitated. The POA portion of the directive names the person who will enforce the directive.
Can the POA Override a Will?
In a general sense, no, a POA cannot override or change a will. One thing they can do is establish a trust. But they can’t write or rewrite a will.
A POA also cannot override the work of the will’s executor. That’s because the POA and the executor are activated at different points in the estate. The POA will work while the testator is still alive, although the testator is likely incapacitated (except in specific business types of POAs). Once the testator has died, the POA no longer has any authority. In contrast, the executor cannot act until the testator has passed away.
Can the Same Person Act as POA and Executor?
Yes. It’s not uncommon for one spouse to choose the other spouse to act in both roles. But in other cases, different people are named as POA and executors. Depending on the size and complexity of the estate, sometimes more than one person is named as POA or executor.
How Do I Choose Someone to be POA or Executor?
The criteria for either are essentially the same. It’s essential that you find people you can have open, honest discussions with about your wishes and believe they will follow your wishes. Trust is key. While relying on family members is common, sometimes there’s a situation where the person naming the POA or executor has reason to doubt the family member will fulfill their wishes. In those cases, it’s best to choose someone else.
While POAs and executors don’t have to be in the same state, it’s helpful if they are. There may be court hearings or other events and meetings that may need to be held in person. If the executor is in charge of maintaining property such as real estate, being local and able to check on the safety and security of the property regularly is a plus. POAs and executors should also be detail-oriented and capable of multitasking. They should be financially sound so as to remove any concerns about conflict of interest.
When it comes to advanced medical directives, the POA should thoroughly understand the testator’s wishes regarding medical interventions. But not only do they need to understand them, they also need to be willing to advocate for them. It’s possible that they will have to stand up to medical professionals who have other ideas. It’s also possible that they’ll have to deal with family members who want different outcomes.
What Should I Do if I Need Help Setting Up a Power of Attorney and/or Will?
Call us at 916-685-1225 for a free consultation. Every estate is different and has unique needs. We can help you determine what’s best for your estate and help you develop a plan that will provide ease of mind, knowing your wishes will be honored and your estate distributed according to your plans.