Executors and trustees play important roles in distributing assets after a person's death. However, they are vastly different positions with disparate responsibilities.
Differences between executors and trustees
While executors and trustees both manage and distribute assets, there are some important distinctions between their roles.
- Executors distribute assets according to the terms of a will, under the probate court's supervision, after the death of the testator. This is a limited responsibility, with a lot of work in a short period.
- A trustee manages a trust for the entire life of the trust, which may begin during the trustor's lifetime and can continue for many years after their death. The responsibility could last for decades and requires long-term management of assets. A trustee typically does not report to a court.
What Is an executor?
An executor is named in your last will and is the person who is responsible for distributing your estate to your beneficiaries according to the terms set out in your will. An executor is required to:
- Obtain a copy of the will and offer it for probate with the probate court
- Appear in court on behalf of the estate and obtain a grant of probate, authorizing them to act on behalf of the estate
- Notify all interested financial institutions of the death (such as credit card companies and banks)
- Open a bank account for the estate
- Pay the bills and taxes of the estate
- Inventory all of the assets of the estate
- Manage all of the property of the estate and keep it in good condition until it can be distributed
- Distribute the estate's assets to the beneficiaries named in the will
- Closeout the estate with the probate court
What Is a trustee?
A trustee is named in the documentation of your trust and is the person who is responsible for distributing trust assets to beneficiaries according to the terms of the trust. A trustee is required to:
- Manage the trust assets during the life of the trustor (person creating the trust) and after their death, for as long as the trust is in existence. This is an extensive responsibility that involves making decisions about investments and long-term management of property as well as maintaining insurance on property and vehicles
- Manage a bank account for the trust
- Maintain records of the trust
- Pay the bills of the trust
- Distribute the trust assets according to the terms laid out in the trust, at the time indicated for distribution. This can include making payments on behalf of beneficiaries, as well as directly to them if indicated in the trust
How to choose your executor or trustee
Whom you select as the executor of your will or trustee of your trust is an important choice.
You should look for someone you trust implicitly, who can handle the responsibility and someone who you are likely to outlive.
It's important to name an alternate for either position in case your first choice is not available. Before you select anyone as an executor or trustee, it's a good idea to talk to them and ask if this is a responsibility they feel comfortable taking on.
Most people prefer to choose a close family member such as a spouse or a child. You can also consider close friends. It is possible to use a company that fulfills these roles if there is no one you feel comfortable with in your life or you don't wish to burden someone you love.
By understanding the differences between executors and trustees, you can make an informed decision in your selection of the person who will manage and distribute your assets.