I am often asked by clients what is the difference between executors and attorneys.
The role of attorney and executor are similar to some extent but also very different. Both roles involve attending to somebody else’s financial affairs but in different contexts. The main difference is when that person can make decisions for another – depending on whether they are to act during that person’s lifetime, or after their death. In addition, attorneys and executors are appointed in different ways by entirely separate documents.
An attorney is appointed by an individual (the Donor) to act on their behalf during their lifetime by the creation of a Lasting Power of Attorney (LPA). An attorney can be appointed to act in respect of either the Donor’s health and welfare matters and/or their property and financial affairs. In this article, I will be focusing on attorneys appointed to deal with a Donor’s property and financial affairs. Subject to the LPA being registered with the Office of the Public Guardian, and any restrictions that may be placed on the scope of their authority written within it, an attorney appointed under a LPA can make decisions on behalf of the Donor in respect of his or her property and financial affairs. This authority to act can extend to making decisions even when the Donor has lost the requisite capacity to be able to make those decisions themselves.
The appointment of an attorney automatically ends on the death of the Donor, at which time their executor becomes responsible for dealing with their financial affairs.
By comparison, an executor is generally appointed in the Will of a person (the Testator). The appointment only comes into effect once the Testator has died, at which point the executor becomes responsible for administering the estate. In the same way that an attorney cannot act under a LPA for a Donor after their death, an executor appointed in a Will cannot act for a Testator during the Testator’s lifetime. The appointment of an executor only comes into effect when the Testator has passed away.
The role of attorney and executor also differs in how they make decisions. An attorney must ensure that they have made every effort to allow the donor to make their own decisions before they decide on a course of action on the Donor’s behalf, and must act in the donor’s best interests at all times. This is set out under the Mental Capacity Act 2005.
In contrast, an executor must act in accordance with the provisions of the Will and is subject to duties set out in various legal instruments, such as the Administration of Estates Act 1925 and the Trustees Act 2000. These duties include collecting in and safeguarding the assets of the estate, paying all debts and liabilities and distributing the estate to the beneficiaries in accordance with the terms of the Will.
It is crucial for both the person choosing to appoint attorneys and executors (and of course those who are due to act) to understand the difference between these very separate and distinct roles, even if the same person is to act as both attorney and executor. Both roles create a heavy weight of responsibility and there are strict penalties for failing to act in the correct manner in either role.
If you would like further assistance or advice about appointing attorneys or executors or if you wish to review your existing appointment please contact Gemma Shepherd.