There’s much confusion around executors and attorneys appointed under an Enduring Power of Attorney. One of the most common is that they are the same thing, and that if you appoint an executor then they are automatically your attorney and can make decisions on your behalf should you be unable to, but that’s not the case. There’s also a misconception that your partner will automatically be your attorney or executor, but again, without official documentation they may be unable to deliver on your wishes. So, what is an executor; what is an attorney; and most importantly, how do they differ?
What is an executor?
You will be required to appoint an executor when you create your Will, whether that be a person or a group of people. Generally, an Executor ensures your Will is carried out and your assets distributed as per your wishes. An Executor also has more specific responsibilities:
- Organising funeral arrangements
The executor has the legal authority, and responsibility, to organise the funeral arrangements. Specific requests for funeral arrangements may be left within the Will, but the executor normally has the final say.
- Applying for probate
The executor often needs to obtain a Grant of Probate from the Court which confirms the Will is valid and provides the executor with formal legal authority to carry out a person’s wishes.
- Organise assets and pay any remaining liabilities
The executor must locate all assets and liabilities before they can be distributed. This may include bank statements, credit cards, real estate titles, mortgage or loan documents, insurances, or unpaid debt statements.
- Protecting the assets
Sometimes it can take time for assets and property to be distributed to its beneficiaries, therefore the executor must care for and maintain the value of these assets until then. This may mean obtaining insurance for real estate, cleaning and regularly checking on property or ensuring any money in bank accounts is still accumulating interest.
- Defend the estate should legal challenges arise
If a person wants to contest a Will in Court, the executor usually must defend the challenge on behalf of the estate (of course a lawyer can help with this, though!)
- Settle any outstanding tax liability with the Australian Taxation Office (ATO)
The executor must notify the ATO of the person’s death and may need to settle all affairs with them by lodging a final tax return or trust tax return.
What is an Enduring Power of Attorney (POA)?
A POA is a legal document that allows you to name a person to make financial and personal decisions on your behalf if you are unable to do so due to injury or illness. The person you nominate is required to act within your best interests to protect your assets and affairs. The person named within your POA is known as your attorney. An Enduring POA means that the person nominated can continue to act on your behalf if you were to lose mental capacity. You are also able to place limits on just how much control your appointed attorney has in particular circumstances.
What happens if I don’t have an attorney or executor?
The Victorian Civil and Administrative Tribunal (VCAT) may appoint someone to make decisions on your behalf should you not have an attorney, such as the Office of the Public Advocate (OPA) or the State Trustees. The Supreme Court of Victoria has the final say on who your executor will be if you fail to appoint an executor. Normally, this would be the person who receives the greatest share of the assets of your estate.
What’s the difference between these roles?
The key differences are when the roles come into effect and the responsibilities they have. An Enduring Power of Attorney can “activate” in situations where you are still alive but unable to make independent decisions, whereas an executor only assumes responsibilities after your passing. An executor also has a limited job description, whereas an attorney may be involved for a long period of time and has a wider range of obligations depending on the situation.
Can I appoint the same person for both roles?
You can, but you need to be mindful that both roles come with heavy and often heartbreaking responsibilities. Importantly, the roles do not overlap. Therefore if the same person is selected, they won’t need to fulfil two roles at once. Whoever you select, it needs to be someone you trust and will hopefully outlive you. People often appoint their spouse or children for the roles.
How do I appoint an attorney, or appoint an executor?
When creating a Will with Waters Lawyers, we will always ask you to appoint an executor. You can also appoint attorney and medical treatment decision maker with us – you simply need to select the person, and we’ll make sure all the paperwork is correct and legally binding.
To book a consultation, contact our friendly reception team on (03) 5996 1600 or visit the ‘make a booking’ page on our website. For more information, visit https://waterslawyers.com.au/making-a-will/