Many people don’t understand why they need a Personal Representative AND a Financial Power of Attorney. However, let’s first start with the definitions of the two:
Personal Representative (sometimes an Executor or Administrator) – this is when an individual has the right and responsibility to manage the finances, property, and other assets of the deceased; the individual is appointed by the Court during the probate process, having been designated in a last will, or the individual is chosen by the court if there is no will.
An aside: If the deceased has chosen to avoid probate, then there is a Trustee instead of Personal Representative and is the person in charge of administering the trust.
Financial Power of Attorney (a.k.a. Durable Power of Attorney) – this is when you give another person legal authority to act on your behalf, by making financial or legal decisions for you, when you are incapacitated or otherwise unable to.
They sound similar and they kind of are BUT the Personal Representative comes into play after death and the Power of Attorney is in effect any time that you are alive, but unable to communicate for yourself. So, a person designated as your agent with Financial Power of Attorney would be able to act on your behalf if you are in a coma, in the hospital, or out in the woods outside of cell phone reception and there’s an emergency in your family or business.
You can give your agent with Financial Power of Attorney as much or as little power as you’d like. One example is that Colin was able to fill out legal banking documents on my behalf while I was out of town because he is designated as my agent with Financial Power of Attorney.
(My debit card number got stolen. Colin and I were adamant about working with and supporting a more local bank and although they win at customer service most of the time, it *can* be inconvenient if you have a jet-setting lifestyle)
The Personal Representative duties can also be divided up. For instance, we have known people who have designated a separate Administrator or Personal Representative for their business and for their personal estate.
An estate planning attorney can help you decide what structure is right for you.
Colin Ley is a Seattle estate planning attorney. He is also the co-founder of LayRoots along with his wife, Shreya.
