by Margaret (Mia) Lorenz, Attorney
A few months ago, I received a message from a reader who had a special request. The reader wanted me to explain the differences among a power of attorney, Guardian and Executor. First of all, bravo to you for being so attentive to the terms used. And secondly, shame on me for using the terms so glibly and loosely without adequate explanation. Let’s explore the terms we use as we navigate the estate planning and elder law landscape.
Sometimes it is helpful to imagine that when you are assuming the role of a specific helper, you are wearing a “hat” that calls to mind your role. As an example, when one is cooking in the kitchen, we can imagine a chef’s hat; when one is constructing a building, we can imagine a hard hat. The idea is that you remain you, but you are performing a certain role requiring specific work in a particular context. So, when a person is undertaking the job of Executor, that person is wearing an Executor hat. I like to imagine that an Executor’s hat is a black top hat – something honorable, respectful and professional.
When you wear an Executor black top hat, you are handling the final affairs of a person who has died. An Executor is nominated in a Last Will and Testament and only acts when the probate court (our local court that handles estates) approves of the nomination. The probate court requires the death certificate of the deceased, the deceased’s ORIGINAL last will and testament that NOMINATES you as Executor, and your promise (under oath) to follow the law in administering the deceased’s estate. Once the probate court approves your application to act as Executor, you begin wearing your Executor hat. As Executor, you are in business to wind up the deceased’s personal affairs and distribute the deceased’s assets according to their Last Will and Testament.
In order to illustrate the difference between a power of attorney and an Executor, imagine that you are named in your mother’s Last Will and Testament as her Executor. Your mother begins to decline and does not get out easily; your mother asks you to handle her banking. Your mother hands you her Last Will and Testament, and asks you, as her Executor, to go to the bank and handle banking for her. What do you suppose the bank will say, as you approach – with your mother’s Will in hand – to express that you are the Executor of your mother’s estate, and your mother has asked that you assist her in banking? The bank will tell you that an Executor only acts when your mother dies, after the court has approved your nomination. Your mother’s Will has NO power while your mother is alive; therefore, an Executor has NO power while your mother is alive. An Executor hat can only be worn when your mother has died, and the court has approved of your nomination as Executor of your mother’s estate.
In order to help your living mother (who, as an example, is having difficulty getting around) with her banking, you must be wearing your power of attorney hat. I liken a power of attorney hat to that of a football helmet. As a power of attorney, you will undertake a tough job, but your mother will have given you the tools – or helmet – to help her with the least amount of hassle. In doing your job as POA for your mother, you will juggle your mother’s wishes, concerns of other family members, doctors, investment advisors, friends of your mother, and all those involved in your mother’s life. Some days you will feel like you have survived a football game of pushes and pulls, but you will have helped your mother by doing what is best for her.
In sum, you are wearing a football helmet that says “POA” when you are named as a power of attorney in a power of attorney document. You are helping a living person with their business and financial affairs, the management and preservation of their assets, and helping them make decisions regarding medical and daily care.
Next, imagine a silver, metal knight’s helmet – picture the knights of King Arthur’s round table, all clad in silver metal and about to do battle. When you are guardian over a person and their estate, you are clad in a metal knight’s helmet and let me tell you why. First, only the king can make you a knight. Likewise, only the court of NC can make you a guardian. Second, the actions and process involved with becoming guardian over a person and their estate is cumbersome and not easy to maneuver. The metal helmet is cumbersome and hard to maneuver. Like a power of attorney, a guardian only acts for a living person; however, only the judge can appoint a guardian. (Recall that a power of attorney is appointed by their principal (mother in our example) in a legal document signed by mother — mother gives you the football helmet). Only a NC court can give you a knight’s helmet/guardianship. When the guardian goes about with his court-granted powers to do for another, his walk is labored and hard; many times, the guardian needs an attorney to make sense of the rules surrounding guardianship. Additionally, guardianship can involve more expense than power of attorney. It is not cheap hanging out with Kings!
A knight trumps a football player – a guardian will revoke a power of attorney. The football helmet is no match for the knight’s steel.
Most of the time, it is preferable to wear a football helmet as opposed to a silver, steel knight’s helmet! That is why most attorneys try to counsel all on the importance of getting a power of attorney document done, so that your trusted agent can help you during times where you may need assistance with the least amount of hassle. When wearing a football helmet, the work is hard, but not as cumbersome as it could be (i.e. if a guardian knight helmet must be donned). Becoming a knight is not easy and the rules surrounding knighthood (i.e. guardianship) are complicated and many times cause great financial expense.
Finally, you only wear an Executor top hat when you are acting for a deceased person and the court has approved of your Executor-ship!
Next month, I will answer a reader’s question which involves explaining the difference between all of the above and a Trustee.
Margaret (Mia) Lorenz is an attorney in Southern Pines at Lorenz and Creed Law Firm PLLC, where she helps people with many legal needs such as preparing their wills and/or trusts, helping when a loved one dies, and helping purchase or sell real estate. She has been assisting people with their legal needs for 26 years.