When you're structuring an estate plan—or when you're going through the process of settling an estate—you'll want to consider the roles executors and trustees play. Depending on how an estate is structured, each may play an important role.
When it comes to responsibilities, there are a few key similarities. Both executors and trustees are:
- Typically responsible for disbursing assets to beneficiaries.
- Responsible for paying taxes.
- Supposed to remain faithful to the wishes of the deceased.
The differences, however, can be more pronounced.
The role of executor
An executor, often a close family member or friend of the deceased, is responsible for distributing the estate (property, assets, possessions) based on the will. (See "How Not to Choose an Executor.")
When an executor's role begins
The executor's role starts based on state-specific probate requirements, such as the need for a certificate to be issued by a court concluding the will of the deceased is legally valid.
Duties of an executor
- Reviews provisions of the will and locates heirs.
- Discusses preliminary probate steps with an attorney.
- Must safeguard and marshal the probate assets in the estate.
- Manages the process of probate court oversight, which may include getting the court's permission to sell and distribute real estate assets.
- Obtains nonprobate asset information such as assets in trust that are payable upon death and those with beneficiary designations such as life insurance.
- Serves as an executor for life.
The role of trustee
A trustee is a designated estate manager who also assumes the roles of overseeing distribution of a trust, or account that holds finances or assets for distribution.
When a trustee's role begins
A trustee's role starts when an appointment is accepted in writing, which could be when the original trustee dies or resigns.
Duties of a trustee
- Must identify, safeguard, and marshal assets titled in the trust's name or payable to the trust.
- Administers the trust and is responsible to its beneficiaries (normally without oversight).
- Monitors assets for quality and preservation, recognizing near-term distribution requirements.
- Monitors and manages ongoing trusts to meet beneficiaries' needs.
- May be required to keep the trust operational for the surviving spouse's lifetime or for one or more beneficiaries.