Power of attorney vs. executor: What’s the difference?

Most of us don't like to think about getting sick or passing away. But if you don't plan ahead, you can leave your family in a stressful and difficult situation. Fortunately, two important legal tools can help: a power of attorney (POA) and an executor. 

Although you can use both tools to make sure your wishes are respected and your finances are handled properly, a POA protects you and your finances while you're alive but unable to act for yourself, whereas an executor manages your estate after you die. 

Understanding the difference between a POA and an executor, and why you need both, can help you make decisions with confidence, protect your assets and give your loved ones clarity when it matters most.

What is a power of attorney?

A power of attorney is a legal document that lets you appoint someone you trust, known as your "attorney," to make decisions on your behalf when you're alive but are incapable of doing so yourself.

In most provinces, two types of POAs are typically prepared alongside a will as part of a comprehensive estate plan:

• a financial POA (sometimes called a POA for Property) to cover financial decisions; and
• a medical/healthcare POA (also called a POA for Care) to cover health care decisions.

The named attorney must act in your best interests. 

A financial POA may be entitled to compensation as prescribed by your province. They can cover the following tasks:

• paying bills or managing bank accounts if you're in the hospital or out of the country
• managing your investments or rental property income 
• handling income, taxes and other day-to-day financial tasks if you're incapacitated

Think of it as a safety net that helps keep your financial life running smoothly if you're unable to manage these things yourself. 

Note that the POA only applies while you're alive. Once you die, your attorney's authority ends, and your executor takes over. 

Read more about POAs

Proper documentation

Financial institutions may require proof of your incapacity and documentation confirming their authority when your attorney needs to act. For example, a bank might request a doctor's letter verifying that you're unable to make decisions, along with a certified copy of the POA.

These extra steps are designed to protect you. They help prevent fraud and ensure your wishes are being respected. 

Limits on powers of attorney

Your attorney can only do what your document (and provincial law) allows. Some POAs are broad, giving your attorney wide discretion. Others are limited to a specific task, such as signing documents to sell your home while you're unavailable.

Your attorney can't make or change your will or update beneficiary designations.

What is an executor?

An executor is the person you name in your will to carry out your wishes after you die. Your executor's role is to manage and settle your estate, and their responsibilities can include:

• locating your will
• identifying, securing and managing the deceased's assets
• paying off debts and outstanding bills
• filing tax returns and paying taxes
• closing the deceased's bank accounts and opening estate accounts
• applying for probate (the court process that validates the will)
• working with lawyers, accountants and financial institutions
• communicating with the beneficiaries 
• distributing assets to the beneficiaries according to your will

Being an executor requires time, organization and sensitivity. Choose someone trustworthy, detail-oriented and willing to take on the responsibility. Having the right person, or people, can make the process much smoother for your family.

Power of attorney vs. executor: Key differences

Both roles help manage your affairs, but they operate at different times and for different reasons, as illustrated by the following chart:

Why you need both a POA and an executor

A proper estate plan includes both POAs and a will that names an executor. They complement each other.

Without a power of attorney:

• Your loved ones may need to go to court to get permission to manage your finances if you're incapacitated.
• Bills could go unpaid, and investments could be neglected, adding stress at an already emotional time.

Without a will:

• Dying without a will (intestate) means that provincial statutes and regulations—not you—decide who gets what. 

Without an executor:

• Your estate could be delayed in probate for months or years while the courts appoint someone.
• Family members could disagree over who should take charge, adding conflict to an already difficult situation.

By naming both roles in advance:

• You decide who will act on your behalf, rather than leaving it up to the courts.
• Your family can focus on supporting you or grieving, instead of navigating complex legal hurdles.
• Your long-term financial health is protected, disruptions are minimized, and the potential for family disputes is reduced. 

Taking action & next steps

Preparing POAs and appointing an executor(s) in your will are acts of care and foresight that make a difficult time easier for everyone involved. 

Here are some steps to help you get started:

1. If your finances and family situation are fairly straightforward, consider using an online service to prepare your will and POAs.
2. If your finances or family situation are more complex (e.g. trusts, blended family), consult a lawyer. When you draft your  will with a lawyer, they'll assess your competence and generally ask if you also want to prepare your POA documents. Since you've already itemized your assets and listed family members for your will, it's often more efficient and less expensive to prepare your POA documents at the same time.
3. Review your documents regularly, at least every five years, or after major life events, such as marriage, divorce or the birth of a child. You may also need to update your documents if your named attorney or executor dies unexpectedly.
4. Inform your loved ones where your will and POA documents are stored so they can act quickly if needed. Consider creating a binder or digital folder to keep everything organized.

Proper estate planning ensures that your money and your wishes are handled in the way you want, both during your lifetime and after your death. Along with transparent, low-fee investment and savings strategies, it's an essential part of financial planning that supports and protects your long-term security and that of your loved ones.