Trustees and executors might seem, at first glance, to be the same. Both are responsible for distributing assets after someone has passed away.
The big difference between the two of them is that an executor is named in a last will & testament (or by a probate court if no will exists), and a trustee is named in a particular type of estate planning called a trust.
What Is an Executor?
An executor (also known as a personal representative) is the person responsible for making sure that a deceased person's debts are paid and their property is appropriately distributed.
This formal legal process is broadly known as probate.
If a will exists, the executor is nearly always named (and is, hopefully, also informed ahead of time).
An executor:
- is named in a will, or appointed by the court when an individual passes away
- is responsible for paying debts and distributing any inheritance among heirs
- serves only until the estate is distributed and probate is closed
What Is a Trustee?
A trustee is the person who is responsible for managing the assets in a trust. A trust is a legal entity that can help your family or beneficiaries limit or avoid probate after your death.
The most common type of trust is a revocable trust (also called a living trust). In revocable trusts, the person setting up the trust (or "trustor") retains control and can make changes to the trust. Essentially, the trustor acts as the trustee while they're still alive.
When the trustor dies, they designate another person to become the trustee. At this point, the new trustee takes on a role that's similar to that of the executor of a will: ensuring that any debts are paid and property is distributed.
There's another type of trust known as an irrevocable trust. In this situation, the trustor signs over all their assets to the trust while they're still alive, and cannot take them back. In these situations, someone other than the trustor or their spouse is often appointed as trustee. The trustee then controls all the assets in the trust, even while the trustor is still alive. While this may sound undesirable, use of an irrevocable living trust can limit both estate taxes and probate after the trustor's death, since everything is legally owned by the trust already.
A trustee:
- may serve either before and after a trustor's death, or only afterwards (depending on the type of trust)
- is appointed by the person setting up the trust
- can serve for a longer period of time than the length of the probate process
Can One Person Function as Both an Executor and a Trustee?
Even if someone has established a trust, they can still make a last will & testament. In many cases, not all assets are put into a trust, and the will can cover those assets, as well as provide other important information. Therefore, it's very possible, even common, to have both an executor of the estate and a trustee involved after someone's death.
It is possible for one person to serve as both the executor and the trustee in this situation. However, this can be a huge amount of responsibility for a single person to take on, particularly if they're grieving for a lost loved one. If you find yourself in the position of being named both trustee and executor, you may want to consult with a lawyer, corporate trustee or financial professional before agreeing to take on both roles at the same time.
Questions? We've Got Answers
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