Executor vs Trustee
Creating a will before passing away is an intelligent choice, as it guarantees the management and distribution of one’s assets according to the will’s provisions, preventing disputes among the deceased person’s heirs. Another crucial decision is selecting the right individuals to serve as executor and trustee. These fiduciaries are obligated to carry out the instructions given in the will. Many people believe that an executor and a trustee are the same, but in reality, there are significant differences in their roles and responsibilities.
Executor
An executor is an individual chosen by the deceased in their will to execute the will’s provisions and is appointed by the court to perform this role. Once the probate court appoints the person named by the deceased as an executor, they become eligible to administer the estate. An executor is typically someone close to the deceased, trustworthy, and capable of carrying out financial transactions. The law requires an executor to collect the estate’s taxes, protect the property, pay claims such as taxes, and represent the estate in case of any disputes or claims made by others. An executor is also necessary for liquidating the estate to distribute the assets among the heirs or beneficiaries. A will may specify additional duties and functions of an executor, even if the law does not require them.
Trustee
If the deceased has established a living trust before passing away, they must name a trustee in their will. A trustee is the person who becomes in charge of the trust’s affairs and does not need permission from the probate court, as the trust property is not considered part of the deceased’s estate. The trustee performs their duties until they can liquidate and distribute the assets among the beneficiaries. A person can be the trustee of their living trust while they are alive, or they can choose to make their spouse a co-trustee. If the spouse remarries, there can be a provision for a co-trustee after the estate owner’s death.
Key Takeaways
• Executors and trustees have similar functions, but executors must be appointed by the probate court, while trustees do not need to deal with the probate court.
• Executors receive a statutory fee, while trustees are entitled to fair compensation for their services to the trust.
