You might say it is a matter of life and death. Basically, an attorney deals with the affairs of someone whilst they are alive whilst an executor deals with the affairs of someone who has died. Whilst that might seem simple and straightforward, it is important to understand the different functions of an attorney and an executor.
Determining what an attorney does very much depends on the nature of the Power of Attorney that has been granted. In Scotland, there are three options when drawing up a Power of Attorney. You can create general Power of Attorney, you can have a Welfare Power of Attorney or a Continuing Power of Attorney. Welfare and Continuing Powers of Attorney were created by the Adults with Incapacity (Scotland) Act 2000. Frequently, Welfare and Continuing Powers of Attorney are amalgamated into a single document.
The common denominator in a Power of Attorney is the transfer or delegation of decision making from the granter to the attorney. First, you should be aware that even though the granter has granted a Power of Attorney, the granter can still deal with their own affairs while they retain legal capacity. The granter has the option of doing things themself or asking the attorney to deal with their affairs for them.
Under a general Power of Attorney, if the granter becomes incapacitated, the attorney can no longer act or make any decisions for the granter. On the other hand, if the attorney is appointed through a Welfare and/or Continuing Power of Attorney, the attorney can continue to make decisions for the granter even if the granter has become incapacitated.
When the granter creates a Power of Attorney, they will specify the powers the attorney can exercise. In a general Power of Attorney, these can be anything from being very restricted to wide ranging. These types of Power of Attorney tend to be used for short term convenience. For instance, if the granter tends to work or travel abroad extensively but needs someone in Scotland available to represent the granter or sign documents on the granter’s behalf, a general Power of Attorney might be the ideal vehicle to use.
More commonly, the type of Power of Attorney to be granted will be a combined Continuing and Welfare Power of Attorney. This type of Power of Attorney delegates power and authority to the attorney to deal with the financial aspects of the granter (the “continuing” aspect of this Power of Attorney) and the granter’s care and welfare needs (the “welfare” aspect). Importantly, these delegated powers survive the granter becoming incapacitated. That means if the granter should suffer an accident or illness preventing them from being capable of looking after their own affairs, the attorney is able to deal with the granter’s affairs.
Again, the powers granted in a Continuing or Welfare Power of Attorney can be as restricted or as wide as the granter wishes. Usually, however, the powers granted are such as to allow the attorney to make decisions and to do all the kinds of things the granter might do in relation to their finances and welfare.
Importantly, all the powers of the attorney end with the death of the granter.
The executor of a Will only gains power on the death of the testator of the Will. When a person dies, having put a Will in place, the executor is the person charged with dealing with the administration of the estate of the deceased for the benefit of the beneficiaries.
The responsibilities start off with registering the death. They then extent to determining the extent of the estate, creating an Inventory of Estate and having Confirmation (Probate in England) granted. They then must ingather the estate of the deceased, pay the debts and distribute the estate in accordance with the terms of the Will.
The executor must arrange a valuation of all assets, be they heritable property such as a house or moveable assets such as stocks, shares and insurance policies as well as jewellery, works of art or antiques.
In addition, the executor must contact all debtors and creditors of the estate to work out how much is due to the estate from various parties and how much the estate needs to pay its creditors. This can involve lots of correspondence and telephone calls and emails.
When all the information has been gathered, the executor needs to compile the Inventory of Estate, sign a declaration and present this to the Sheriff Clerk in the Sheriff Court responsible for the area where the deceased lived.
Importantly, before the Inventory can be presented, should there be an Inheritance Tax bill to pay, this must be paid and evidence of payment submitted with the Inventory. Also, when dealing with Inheritance Tax, the executor should seek advice on whether there are any mitigating steps that can be taken to reduce exposure to Inheritance Tax.
The final elements of the executor’s duties relate to ingathering all monies due to the estate, settling the debts and distributing the estate in accordance with the Will.
If there are any young beneficiaries, arrangements may need to be made to hold their in the estate in trust until they reach the age of majority (16 in Scotland) or the age specified in the Will.
As you can see, the duties of an attorney are completely different from the duties of an executor. Of course, an attorney may also be an executor and simply perform the different roles at the appropriate times.
Murray Beith Murray Partner, Andrew Paterson, specialises in trusts, estate planning and asset protection. If this blog has raised any questions or you have a matter to discuss please get in touch using the enquiry form or call on 0131 225 1200.
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