Trustee vs. Executor: What is the difference?
05 Mar Trustee vs. Executor: What’s the Difference?
When you’re entering the realm of estate planning, there can be a lot of information thrown at you. Unfamiliar terms can get confusing. It is easy to misunderstand who does what. We are here to help you understand things better and feel more confident about making decisions regarding your estate plan. Let’s examine the differences between a trustee and an executor, when and why you would need to appoint them, and how they each serve their roles.
Trustee vs. Executor
Both trustees and executors play important roles in estate planning, but they have very different roles and responsibilities.
Executor – Commonly referred to as a “personal representative,” this is the person who settles the estate and completes the probate process after someone passes away. They are responsible for many things, including notifying beneficiaries and creditors of the death and paying taxes. This person would be appointed when you make your will. They will be in charge of administering your estate, and must follow your instructions.
Trustee- The trustee is the person in charge of managing the assets within a trust. When the trust is created, you would appoint the trustee. If you decide to be a trustee during your lifetime, then you will have to appoint someone to take over those responsibilities after you. They will be bound by a fiduciary obligation to act in the trust’s best interest and will make decisions on its behalf.
Trusts can last several years, or even decades. Trustees are appointed to manage assets that are used to fund the trust. They follow the instructions laid out by the trust creator. They’ll manage the assets and perform distributions when appropriate.
Trustor – The person or entity (business, group, organization, or family) who opens and funds the trust. You can be the “trustor” if you are an individual or you and your spouse, if you are married, or your entire family. Do you need an executor as well as a trustee? The executor’s
role
involves settling an estate following the death of the owner. They perform essential tasks such as paying debts, closing bank accounts, completing the probate process, and distributing inheritances. A trustee is required only if a will includes a trust. The trustee’s (or successor trustee’s) role can continue for many years after the grantor dies. A trustee will be needed to manage funds in trust for minors until they reach a certain milestone or age. Some grantors will write instructions to distribute money in incremental amounts over time, rather than giving their beneficiaries a large sum at once. Can the same person serve as both executors and trustees?Yes. In Arizona, the same individual can serve both as executors and trustees. It’s not unusual for the same person to perform both roles. One person can be both the executor and trustee.
Remember that each role has different responsibilities and time commitments. Some people choose different individuals for each role to divide the responsibilities. It can be beneficial to appoint two people for each role, especially if the estate is large or complex. Or if the owner of the estate prefers a third party who is not involved. Estate Planning Attorney in Glendale AZ
You do not have to handle estate planning or trust management on your own. You can ensure that your estate plan is bulletproof, and your trust is being managed competently with professional guidance. Unsure if your estate can avoid probate? The Glendale office of Phelps LaClair, with its experienced attorneys, can assist you in preparing all the necessary legal documents. Call us at
480-892-2488
today to get started with a free consultation.
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