One of the most common questions clients have is what is the difference between a financial Power of Attorney and a Last Will and Testament, and why do I need both. Both documents can be vital parts of an estate plan, as they serve separate purposes, so it is important to understand the difference between the two.
Financial Power of Attorney
The Financial Power of Attorney, sometimes called a Durable or General Durable Power of Attorney, is a document in which a person (the principal) names another person (the agent) to make financial decisions for the principal during the principal's lifetime, when the principal is unable or unwilling to make financial decisions for him or herself. The key here is that the principal is still living. The authority of the agent under the Financial Power of Attorney document ends when the principal dies. The document is null and void once the principal has passed away.
Last Will and Testament
The Last Will and Testament, or Will, is a document in which the testator (i.e. person making the Will) nominates a person (the Personal Representative) to handle the financial affairs of the testator and division of the testator's assets after the testator passes away. The person nominated as Personal Representative does not have legal authority until the Probate Court officially appoints him or her as Personal Representative.
It is important that individuals appoint decision makers during life using a Power of Attorney and after death using a Will or other post-death estate planning instrument. This gives clients control and a voice in who will be handling their financial affairs when they are no longer able to do so.
*This blog post is not intended to serve as legal advice. If you would like legal advice specific to your situation, please contact one of our knowledgeable attorneys at 414-273-1414.*