For most homeowners, your property is the most valuable asset you’ll ever own. Unfortunately, there are situations where you may not be able to make legally binding decisions related to your current or future home.
Whether you’re travelling overseas, deployed, or simply planning for the future, you should find a trustworthy person to act on your behalf. On the flip side, you may find yourself in a position where you have to act in someone else’s best interest (an aging parent, for example).
That’s where power of attorney (POA) and executorship comes in—but which option makes sense in your circumstances? If you’re unclear on the difference between the two, here’s what you should know.
What is Power of Attorney?
Power of attorney allows another person to act on your behalf while you’re still alive. Depending on the terms of this legal document, the other party could have full control over decisions related to your medical care, your assets, or both.
In real estate, this comes into play when one person has been granted the authority to access or manage a property that belongs to another. They are known as “the agent” and “the principal.”
One common scenario when this could apply is: acting as the agent for a loved one is unable to make crucial decisions. For example, an elderly parent with Alzheimer’s.
Are you planning to sell a home? Whether you’re doing so on behalf of a loved one or selling your own property, you can learn more about the process below.
- How Much Does it Cost to Sell Your House in South Etobicoke?
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What is Executorship?
Executorship is often confused with power of attorney (POA), but the two are very different. While POA allows one person to act on behalf of another who is still alive. An executor is appointed to carry out the terms of their will once they’ve passed away. That means taking stock of their assets, paying off debts, and administering what remains among their beneficiaries.
If you’re looking to appoint an executor for your estate, getting in touch with an attorney who’s experienced in estate law is the first step. If you’ve been appointed as an executor or someone has asked you to take on this role, it’s important to understand the responsibilities involved. Once again, speaking to a qualified lawyer can be helpful.
Why Assigning the Right Agent is a Big Deal
When you are named POA or executor of someone’s estate, it’s a pretty important decision. There are numerous responsibilities and tasks to carry out. It’s important that whoever is appointed understands the weight of the task. Remember how I said that your home is probably your most valuable asset? By assigning someone as POA or executor, you are trusting them to take care of that asset.
Think about it, you are asking someone to either take care of you and your finances when you are vulnerable or to fulfill your final wishes after you pass away. In most cases, executors are entitled to compensation, usually about 5% of the estate’s worth. However, that should not be the main reason why someone wants to take on the role. It’s important to find someone who is intelligent and caring. They should want to help you.
Challenges of Being a POA or Executor
While the law is set up to make sure that those who have been granted power of attorney or named executors can carry out their roles smoothly, challenges can arise.
When it comes to power of attorney, there are some cases when those who are close to the principal may feel that the agent is misusing their position or mismanaging assets. From there, they may try to challenge the POA on the grounds that the principal wasn’t mentally capable of making the decision—or that they were unduly influenced. That’s why it’s important for anyone who’s granting power of attorney to talk to their loved ones and ensure that their wishes are clear.
In cases of executorship, there are also common issues that can disrupt the process. Many can occur during probate, a period during which the executor applies to have their appointment approved by the court. This process can take a while—in some cases, a year or more. Fortunately, it can sometimes be sped up through the courts (if there’s an imminent real estate transaction, for example).
If you’re getting ready to sell a home, finding a skilled and experienced agent is the first step. You can learn more about my approach to selling right here.
What if There’s Nobody to do the Job?
If a person is unable to make medical or financial decisions and there’s no POA, someone will need to step up. Otherwise, the courts will appoint someone. This is why having a will and assigning a POA is critical for all of us. Even if you are young and in good health, it’s always best to be prepared.
The same is true when an executor is needed and nobody has been appointed. A loved one might volunteer to take on the job, or someone will be appointed by the court.
The Bottom Line
It’s a fact of life: we will all pass away one day. Many of us will find ourselves in a situation where we can no longer make all of our own decisions. We may also have to act on behalf of somebody who can’t. As a result, it’s important to be familiar with the concepts of power of attorney and executorship.
Fortunately, speaking to an experienced lawyer who understands estate law can help you get up to speed if need be. I would also be happy to answer any questions that I can about this topic as it relates to real estate.
Need help selling a loved one’s home? Call or text me at 647-239-7587 or send me an email at melissa@southetobicoke.com to get started.
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