Heard in the Office: “I Want to Name My Son Executor under My Power of Attorney.”

I hear this a lot.  This post is about vocabulary.

A Durable Power of Attorney is the document where you name someone to help you while you are living – you name someone (usually a spouse, child, sibling, or best friend) to help you in case you are unable to manage your finances yourself, for example if you are in the hospital, develop dementia, or – gasp – go on vacation.  When you name someone in your Durable Power of Attorney, we call her an “Agent.”   You Agent can help you, while you are living, with banking and personal business, like paying bills, applying for a reverse mortgage, changing the amount of your IRA distributions, etc.

After you die, the Agent’s power ceases.  Now your Will comes into play, and whomever you have named as your “Personal Representative” takes over managing your finances.  (Wait! What happened to the word “Executor”?  See this post.)  Your Personal Representative will pay your last bills, cash out your life insurance, probably consolidate multiple bank accounts into one account, sell your house, etc., and then, once all the dust has settled, divide the proceeds up among your heirs.

The “Agent” under the Durable Power of Attorney and the “Personal Representative” under your Will have essentially the same jobs.  And quite likely, you have named the same person in both documents.  (Usually, whomever a client wants handling her money while she is living is the same person she wants handling it after she dies.)  But to avoid confusion when your Agent is dealing with the bank or other financial institution, make sure the Agent refers to herself as the “Agent” and not the “Executor.”  If she introduces herself as the “Executor,” people will think that means that you have died – and most of us would rather not have others thinking that until the time actually comes.