It is time to dispel the urban myths surrounding the roles of two very different types of fiduciaries: agent and executor.
Assume that your dad signs a durable (financial) power of attorney and names you as the agent. Five years later your dad dies. What authority do you have to manage his estate after his death?
Your authority under the power of attorney ended when your dad died. A power of attorney is a writing that complies with the statutory requirements. In Texas, those are found in the Estates Code. The power of attorney is signed by the principal (in this example, your dad) and appoints an agent (you). The agent’s duties start and end on the date or event stated in the document. The power of attorney terminates when the principal dies.
After your dad’s death, it will do you absolutely no good to storm into his bank, throw the power of attorney document onto the manager’s desk and demand the money in your dad’s bank account. The manager will just laugh at you and then call security to escort you off the premises.
Now let’s address a different type of fiduciary: executor. Assume that your mom signs a will and names you as the executor. Five years later your mom is suffering from dementia. What authority do you, as her named executor, have to manage her affairs?
A will is a writing by the testator (your mom) for the final disposition of her estate. For you to have any authority over your mom’s estate, three things have to happen: your mom has to die, the will has to be admitted to probate by a court with jurisdiction, and you have to be appointed by the court as executor of your mom’s probate estate and then qualify to serve.
Your mom’s will is nothing more than a piece of paper until it has been admitted to probate.
Her appointment of you as executor is nothing more than a paragraph in that piece of paper. The Judge is not required to appoint you as executor. You have no power over your mom’s property before you have been appointed and qualified to serve.
So it does no good to swagger around your mom’s assisted living facility claiming that as her executor you have the right to decide where she lives and how her money is spent. As a named executor, you have no right to manage your mom’s estate while she is living. Being named as an executor does not, during her lifetime, give you authority to access her accounts, gather her assets, or determine who visits her.
One type of fiduciary, that of agent under a financial power of attorney, has only the power and authority given in the document, and then only during the lifetime of the principal. The other type of fiduciary, that of executor, has the power and authority given by statute, and then only after the death of the principal/testator and a court order.
Virginia, a 1982 SMU law school graduate, has advised clients for over 35 years. For more information, visit hammerle.com, and for newsletter sign-up, email email@example.com. This column does not constitute legal advice.