Selecting an executor and or a trustee to manage your assets after you’re deceased is something to give careful consideration. What are their responsibilities? Should they be the same person or different people? In this article, we’ll discuss the differences in the roles of executor and trustee and help you determine how to go about choosing each.
An executor is the person who is named in a will, appointed by the court, and responsible for probating the will and settling the estate. This role is called administrator when there is no will; and sometimes personal representative is used to describe both roles. Generally, estate administration is court supervised and subject to strict procedures.
Typically, a probate petition must be filed with the court for a personal representative to be appointed. If the person agrees to be the executor, and no one objects, the court will issue letters testamentary. When there is no will, they are called letters of administration. These letters authorize the personal representative to gather the estate’s assets, sell assets, pay creditors, and open an estate bank account. A personal representative is ultimately responsible for distributing the estate assets to the beneficiaries in accordance with the terms of the will. If there is no will, then the assets are distributed to heirs in accordance with state law. Distribution of estate assets, in either case, happens only after debts, taxes, and administration expenses are paid.
A trustee, on the other hand, is an individual or trust company named in a trust document and is in charge of the assets that are held in a trust. Assets held in a living trust avoid probate, which means that court supervision is typically not required. In most revocable living trusts, you act as the initial trustee. While alive and well, you can make changes including moving assets to and from the trust, changing its beneficiaries, or even revoking the trust entirely if you decide it’s no longer necessary. If you are no longer able to manage your affairs, because of cognitive impairment or another injury, your incapacity trustee will step in and handle the trust for you. Upon your death, the successor trustee will distribute the assets held in the trust to your named beneficiaries and subsequently close down the trust, similar to an executor, without the burden of probate.
You have the option of having more than one trustee or executor. It is often better to name a sequence of trustees or executors rather than joint ones. The executor and successor trustee can be different people, but do not have to be. Designating the same person as the executor of your estate and your successor trustee will minimize expenses, but naming different ones will not allow one single person to have unilateral control. There are advantages and disadvantages to each setup. Give us a call at the Forrest Firm today so we can help you select your executor and trustee.