What is A Power of Attorney?

A Power of Attorney is a document prepared by someone which designates another person to act on his or her behalf if he or she is unable to make a business or financial decision for himself/herself during his or her lifetime (i.e., when you are still living, but incapacitated, unconscious or otherwise unavailable). This document grants permission to an individual whom you trust to act as your agent to make important decisions. A Power of Attorney and Attorney-in-Fact are terms sometimes used interchangeably to identify this individual. You can choose to appoint a Power of Attorney or Attorney-in-Fact to assist with personal and financial matters.

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Does a Power of Attorney remain valid after a death?

The short answer is no, a Power of Attorney dies with the person. A Power of Attorney is a document that grants another person permission to act on their behalf, during life, thus when that individual passes away, the document is null and void. 

So who can act on behalf of the deceased to make important decisions?

The answer to this question is not as clear-cut. The reason being is that before it is determined who can make decisions on behalf of an estate, we must first decipher what the decedent's wishes were and if they had a valid estate plan outlining those wishes. The first question that needs to be asked in order to figure out who has the authority to act on behalf of the deceased is asking “Is there a Will?” 

If there is a Will

The Executor(s) or Personal Representative(s) named in the decedent’s Will will be the responsible party(ies) who have the authority to act on behalf of the estate. However, in most situations, the Executor/Personal Representative will need to be legally appointed to obtain this authority. The legal process of appointing an Executor/Personal Representative is known as probate. The probate process, although it varies slightly from state to state, requires the Executor to supply documentation such as the death certificate, the decedent's Last Will & Testament, and documents that prove the identity of the presumed Executor/Personal Representative. Quite often, notices must be given to the next of kin, as well as those potentially receiving a distribution from the estate (a beneficiary). Once the probate process is completed through the necessary channels, the court will issue an order (often called “Letters Testamentary” or an “Executor’s Certificate”) that formally appoints the Executor. This order, the “Letters Testamentary” or an “Executor’s Certificate” is a document from the court declaring that the Executor has the legal authority to act on behalf of the estate. 

If there is not a Will

If there is not a Will, then the decedent’s property will typically pass to specific beneficiaries that are defined under the laws of the state where the decedent resided (i.e., the state’s “intestacy” statutes). However, the estate stil needs to be formally opened by the probate court and an “Administrator,” which is the name for an Executor in situations where there is no Will, must be appointed by the court.  The person who can act as an Administrator is usually the “next of kin” of the decedent, but it varies from state to state. During this process, the first individual in the “next of kin” line that is willing to act will apply to the probate court to be appointed as Administrator. The court will then appoint the Administrator to settle the deceased person’s estate, tasking them with the same responsibilities as the Executor, usually with the additional task of obtaining a bond as a condition of their appointment. In most cases, the person appointed is a family member, though, if no one comes forward and the deceased had an outstanding bill or liability, a creditor may also apply and be appointed as Administrator in order to open the estate and pay themselves back. 

A person has been legally appointed, so now what?

Similar to a Power of Attorney, the legally appointed party known as the Executor/Personal Representative/Administrator can now make decisions on behalf of the estate. This person now has a legal commitment (known as a “fiduciary duty”) to follow the instructions and manage the wishes and affairs outlined in the Will or pursuant to the state’s intestacy statute. This includes collecting assets, valuing property, paying bills, safeguarding assets, and distributing the estate. 

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