What is the Difference Between an Executor and Trustee?
By establishing a will or trust, you are creating instructions for your executor or trustee to carry out your final wishes and distribute your assets to the appropriate people. Being an executor or trustee carries a large financial, legal and moral responsibility, so it is important to choose this person carefully. What is the difference between an executor and trustee?
First, let us look at the responsibilities that are designated to each person. An executor is nominated in a will. The executor must be appointed by the court before they have any authority. The executor will locate and review the will to ensure it is the latest version if multiple wills exist. Then, they will work with the court to admit the will to probate. This person is also tasked with notifying Social Security (and other pertinent government organizations, such as Veterans Affairs), beneficiaries, heirs and creditors of the death.
Once probate is opened, the executor generally will move the decedent’s bank accounts into a new estate account for the purpose of consolidating financial assets. Then, they will pay any outstanding bills, taxes, debts or creditor claims from this account. The executor will also collect on life insurance policies and other remaining sources of income that are payable to the estate. During probate, the executor will collect all the decedent’s personal property to be distributed according to the terms of the will. They also take over maintenance and upkeep of any real estate properties, keeping them in good condition until the probate process is completed. Once all financial obligations are met, any remaining money or property is distributed to beneficiaries and heirs.
Because probating a will is a specific and complex legal process, the executor will be subject to oversight of the probate court.
While a trustee has a similar checklist of items to carry out upon the death of the settlor, they do not need to open a probate proceeding with the court. A trustee is responsible for handling ongoing administration of the trust over time. Because there is no probate to be finalized, many trusts can create further trusts that will go on for years following the death of the settlor. Testamentary trusts can designate payouts for beneficiaries from the trust fund at various intervals throughout the beneficiary’s life, such as payment for college tuition or gifts upon getting married. The trustee is responsible for managing these long-term transactions until the trust terminates.
Have you been appointed as an executor or trustee and want legal guidance in performing your duties? Are you ready to create an estate plan to protect your future, but are not sure where to start? Let the lawyers at Brown Law Firm, LLC help you. Call (303) 339-3750 to make an appointment.