Trustee vs. Executor: Understanding Roles and Responsibilities
Trustees and executors, also known as personal representatives, are crucial figures in managing a person’s estate after they pass away. Both roles involve handling the deceased’s assets, settling outstanding debts, and distributing the remaining assets to the heirs. This process is commonly referred to as “settling an estate.” An “estate” comprises all the money, property, and assets owned by an individual at the time of their death. There are several primary differences between a trustee and an executor that should be noted, as well as differences in their assigned responsibilities.
Differences Between a Trustee and an Executor
The primary difference between a trustee and an executor lies in their appointment process. A trustee is appointed through a trust document, such as a living trust, while an executor, or personal representative, is named in a last will and testament. Another significant difference between the two roles is the process they follow to settle an estate. Since wills and trusts function differently, executors and trustees must follow distinct procedures.
Role and Responsibilities of an Executor
A last will and testament is a legal document that provides instructions to the court on how your assets should be distributed after your death. You name an executor or personal representative in your will to settle your estate and ensure your wishes are carried out properly. Their responsibilities include handling issues with creditors, addressing objections from omitted heirs, managing property transfers, and ensuring that each beneficiary receives their inheritance.
A major drawback of going this route is that your estate must undergo probate, a process that can sometimes take years before your assets are distributed and your estate is settled. The executor is responsible for obtaining letters of authority from the probate court and guiding the estate through this complex process. In case of difficulties, consulting an experienced probate lawyer is recommended.
Role and Responsibilities of a Trustee
If you wish to avoid the complexities of probate court for your family, a living trust may be a more suitable option. As part of this, you will need to appoint a trustee to manage and settle your estate after your death.
When you set up a living trust, you legally transfer your property into it and manage it yourself while you are alive. This means that you are both the grantor (the person who created and owns the trust) and the trustee (the person who manages the trust on a day-to-day basis). Upon your death, your appointed successor trustee takes over the role of trustee, managing and distributing your assets according to the instructions outlined in the trust document.
The responsibilities of a trustee are similar to those of an executor, but with one crucial difference: Trustees do not need to go through probate to settle the estate since living trusts avoid probate court. This is a significant advantage of a living trust. If you have been appointed as a trustee and need assistance with trust administration, it is strongly advised that you seek help from an experienced trust attorney.