Estate planning doesn’t have to be a complex, nebulous and confusing term. Estate planning is something that everyone must deal with, at one point or another in their lives. The regulations managing Estate planning vary from province to province, and the laws may differ in other countries. Two vital positions frequently discussed in Canadian estate planning are the Executor and the Power of Attorney (PoA). Both are two distinct roles, which this article will delve into:
Appointing the Right Individuals
1. Definitions and Basic Understanding
Executor:
In the Canadian context, an Executor (sometimes referred to as a “liquidator” in Quebec) is a person or institution named in a Will to administer the estate and ensure that the deceased’s wishes, as specified in the Will, are carried out after their death.
Power of Attorney
A Power of Attorney is a document appoints which allows you to give someone else the authority over your financial affairs and property. It applies in situations where a Will would not apply.
2. Duration and Timing
How long does each role last? How long can you be an Executor? How long can you be appointed as a Power of Attorney?
Executor:
The role of the Executor in Canada happens upon the death of the testator (person who wrote the Will). The Executor’s responsibilities continue until the estate is fully settled, which, depending on the estate’s complexity, can range from a few months to several years.
Power of Attorney (POA):
A PoA is a Canadian legal document, allowing an individual (known as the grantor) to designate someone (referred to as an Attorney, not to be confused with a lawyer) to act on their behalf concerning financial or health matters, especially if they become incapacitated. Much like the role of an Executor, the range of time an Attorney has to deal with his/her specific duties often varies.
3. Scope of Responsibilities
The scope of responsibilities vary on the type of responsibilities/document that you create. The Executor of your Last Will and Testament has the following responsibilities listed below (this is only a brief overview):
Executor:
- Asset Management: Identify, appraise, and safeguard the deceased’s assets, ensuring they adhere to Canadian laws.
- Debt Payment: Address the deceased’s outstanding debts, including taxes—in collaboration with the Canada Revenue Agency when necessary.
- Estate Distribution: Distribute the remaining assets to the beneficiaries, according to the will.
- Legal Processes: Engage in the probate process if required and address any legal challenges to the Will.
The “Attorney” appointed to follow your wishes, (as outlined in your Power of Attorney document) has the following responsibilities, as listed below. These responsibilities vary upon the type of Power of Attorney, and the instructions you have outlined for him or her to follow.
Here is a brief overview:
Power of Attorney:
- Medical Decisions (Healthcare PoA): Under a specific PoA for personal care, the attorney can make healthcare decisions on behalf of the grantor.
- Financial Management: Oversee the grantor’s financial assets, which may include banking, investments, and bill payments.
- Real Estate and Personal Property: In accordance with Canadian laws, manage or sell real estate and other assets.
- Other Specified Powers: As detailed in the PoA document, this could include tasks like business decisions.
4. Limitations
Executor:
- Guided by the Will: Canadian Executors are strictly bound by the directives of the will.
- Pre-death Authority is Absent: The Executor’s authority is exclusively posthumous.
Power of Attorney:
- Adhering to the Grantor’s Interest: Every decision made must prioritize the best interests of the grantor.
- No Alterations to the Grantor’s Will: The attorney cannot modify any existing will of the grantor.
- Scope Restricted by the Document: A POA operates within the stipulated boundaries of the document, respecting Canadian legal standards.
5. Appointing the Right Individual
Given the considerable responsibilities and potential challenges, it’s paramount for Canadians to choose reliable, adept individuals for both roles. It might sometimes be practical for one person to act in both capacities, but the pros and cons should be thoroughly evaluated.
It is very important that Canadians understand the differences between being an Executor, vs. being appointed as a Power of Attorney.
