What’s the difference between executor and trustee?
After reading this article about the difference between executor and trustee, you’ll know which one is right for you.
One manages your estate for your beneficiaries.
The other sells your estate off.
Let’s dig in.
When the courts appoint an administrator to an estate, they can choose anyone. This includes creditors or third-party companies. Meaning you and your family lose all control over the estate.
If you want to create a will for your estate or file a petition to become the administrator of an estate, fill out the form below for a free consultation. Free consultations are first come first serve. We always run out of slots. Make sure you get yours locked in now.
Difference Between Executor And Trustee
Both executors and trustees manage and distribute assets.
But there is an important difference between executor and trustee.
- Executors distribute assets according to the terms of a will 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. This may begin during the trustor’s lifetime. It can continue for many years after their death. The responsibility could last for decades and requires long-term management of assets. A trustee does not report to a court.
The main difference between executor and trustee is that how they manage the estate.
Related: Estate Planning Checklist
Trustee vs Executor
Let’s talk about the main difference between executor and trustee.
An executor manages a deceased person’s estate to distribute his or her assets according to the will.
But a trustee is responsible for administering a trust.
A trust is a legal arrangement in which one or more trustees hold the legal title of the property for the benefit of the beneficiaries.
Related: Power of Attorney
What Is A Trustee In A Will?
A trustee gets named in the documentation of your trust.
This is the person who handles distributing trust assets to beneficiaries.
They distribute assets according to the terms of the trust.
A trustee is required to:
- Manage the trust assets during the life of the trustor and after their death. Management of the trust lasts for as long as the trust is in existence. This is an extensive responsibility. It involves making decisions about investments and long-term management of property. It also includes 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. And at the time indicated for distribution. This can include making payments on behalf of beneficiaries. It also means making payments directly to them if indicated in the trust.
What Is An Executor?
An executor is named in your last will.
This is the person who handles distributing your estate to your beneficiaries.
They have to distribute your estate according to the terms set out in your will.
An executor is required to:
- Get a copy of the will and file it for probate with the probate court
- Appear in court on behalf of the estate and get a grant of probate
- Notify all interested financial institutions of the death
- Open a bank account for the estate
- Pay the bills and taxes of the estate
- Inventory all the assets of the estate
- Manage all the property of the estate and keep it in good condition until it can get distributed
- Distribute the estate’s assets to the beneficiaries named in the will
- Close out the estate with the probate court
What Is The Trustee Role?
A trustee takes legal ownership of the assets held by a trust.
They assume fiduciary responsibility for managing those assets and carrying out the purposes of the trust.
What Does A Trustee Do?
What does a trustee do?
A trustee takes legal ownership of the assets in the trust.
A trustee handles the assets in a trust, the trust’s tax filings, and distributing the assets according to the trust.
A trustee has a fiduciary responsibility to act in the best interests of the beneficiaries of the trust.
A trustee must distribute the property per the settlor’s instructions and desires.
A trustee’s three primary jobs are investing, administering, and distributing assets in the trust.
Who Can Be A Trustee?
So, who can be a trustee?
A trustee can be any suitable adult, a company, or a corporate entity.
A suitable adult means anyone who is not likely to become bankrupt or mentally incompetent.
Many people can serve as the trustee.
Often, spouses both serve as the trustee.
When one spouse passes away, the other becomes the sole trustee.
Next, let’s discuss what the trustee duties are.
What Are The Trustee Duties?
A trustee’s duties get laid out by the trust document, which is often in the will.
A trustee’s fiduciary duties are to act in the best interests of the beneficiaries and follow the law.
A trustee’s duties encompass:
- management of the property
- exercise of discretion in relation to a discretionary trust
- represent the estate for legal purposes
- manage the affairs and expenses of the estate
- contact government institutions as needed
- issue notifications, such as public notice of probate
- attend to tax-related tasks, such as filing tax returns
- distribute assets to the beneficiaries.
Additionally, a trustee’s duties include:
- act in the interests of the beneficiaries
- act promptly and with reasonable care
- not personally make a profit from the will trust
Executor Of An Estate
An executor of an estate is an individual appointed to administer the estate of a deceased person.
The executor’s main duty is to carry out the instructions to manage the affairs and wishes of the deceased person’s estate.
- What An Executor Cannot Do
- Executor Responsibilities To Beneficiaries
- Can An Executor Override A Beneficiary
- Can An Executor Decide Who Gets What
- Can An Executor Of A Will Also Be A Beneficiary
- Contesting An Executor Of A Will
- Can An Executor Change A Will
- Executor Of Will Refuses To Pay Beneficiary
- What Does An Executor Of A Will Do
- What Power Does An Executor Of A Trust Have
- Executor Not Communicating With Beneficiaries
- Do You Need An Executor For A Will
What An Executor Cannot Do?
What an executor cannot do includes:
- go against the terms of the will
- change beneficiaries of a will
- stop beneficiaries from contesting the will
- breach your fiduciary duties
- fail to act in accordance to the will
- fail to manage creditors and pay taxes
- co-mingle trust property with personal property
- self-deal assets to yourself
- sell assets below market value
- embezzle money and assets
- neglect the estate
- mismanage real estate in the trust
- make threats to beneficiaries and heirs
- not provide transparency to the beneficiaries and heirs
Executor Responsibilities To Beneficiaries
An executor’s responsibilities to beneficiaries include:
- notifying them that they are beneficiaries
- timely distribution of the assets in the trust
Beneficiaries have the right to know that they have been included in the will.
It’s important that an executor notify them early in the probate process.
The other executor’s responsibility to beneficiaries is timely distribution.
Some states have specific deadlines that executors have to follow.
But the average deadline is one year to distribute the estate.
Can An Executor Override A Beneficiary?
Wondering can an executor override a beneficiary?
Yes, an executor can override a beneficiary to stay compliant to their fiduciary duties, the will, and court mandates.
An executor can override a beneficiary’s wishes if they contradict the will.
Can An Executor Decide Who Gets What?
An executor can decide who gets what if they have a power of appointment.
A power of appointment allows the executor to decide how to distribute property.
If they have a power of appointment, they do not have to follow a predetermined plan.
A general power of appointment allows the executor to distribute property to anyone.
A limited power of appointment gives direction on who to distribute assets to.
Limited power of appointments can direct assets to specific people.
These people include grandchildren, children, charities, etc.
Can an executor of a will also be a beneficiary?
Can An Executor Of A Will Also Be A Beneficiary?
Yes, an executor of a will can also be a beneficiary.
Probate courts favor executors being beneficiaries.
Probate courts will even appoint beneficiaries over other individuals.
The only reason a beneficiary could not be an executor would be if they were unqualified.
Usually, an unqualified executor would be beneficiaries who are:
- under 18 years old
- incompetent or incapacitated
- non-citizen or non-permanent resident
- involved in substance abuse, dishonesty, or improvidence
Contesting An Executor Of A Will
Contesting an executor of a will is tough.
Beneficiaries cannot contest an executor of a will because they disagree with their decisions.
Contesting an executor of a will means there has to be proof the executor acted in misconduct or they are incompetent.
If you want to contest an executor of a will, fill out the form below.
We have experience successfully contesting executors of wills.
Can An Executor Change A Will?
An executor cannot change a will.
An executor has a legal duty to carry out the instructions in the will.
An executor must act in accordance with the will and protect the assets of the estate.
An executor cannot change a will even if they, and the beneficiaries, want to do so.
Executor Of Will Refuses To Pay Beneficiary
What if an executor of will refuses to pay a beneficiary?
If the will instructs the executor to pay the beneficiary, but they don’t, then that’s misconduct.
That is unless they are paying off taxes and debts before they pay the beneficiaries.
If an executor of the will refuses to pay a beneficiary, you can file a civil lawsuit against the executor to recover your assets.
What Does An Executor Of A Will Do?
An executor of a will is in charge of carrying out the instructions left in the will.
They are responsible for handling the affairs of the estate.
What an executor of a will does includes:
- filing the will with the probate courts
- notifying banks, credit card companies, and the Government of the death
- deciding if probate is necessary
- representing the estate in court
- setting up an estate bank account for income and expenses of the estate
- file an inventory of the estate with the court
- maintain the property
- pay the estate’s debts and taxes
- dispose of other property
What Power Does An Executor Of A Trust Have?
What power does an executor of a trust have?
An executor of a trust has the power to:
- decide who gets what if they have a power of appointment
- override a beneficiary
- sell real estate
- open and close bank accounts
- continue making payments from the estate
- pay and collect debts
- distribute funds to the beneficiaries
- file taxes for the estate
- hire an attorney for the estate
- file papers to close out the estate
Executor Not Communicating With Beneficiaries
What can you do if an executor is not communicating with the beneficiaries?
If an executor is not communicating with the beneficiaries, they are violating their fiduciary duties.
Their duties are to keep the beneficiaries up to date on the probate process.
You can file a petition with the probate court to force them to communicate.
Related: Executor vs Administrator
Do You Need An Executor For A Will?
You do not need an executor for a will.
But if you don’t have an executor for a will, the probate courts appoint someone to serve as the executor.
It’s a good idea to name an executor for a will so that you know who will manage your estate.
Protect Your Family
Now you know all about the difference between executor and trustee.
We see people pass away without wills all the time.
Their inheritance gets split up by the government.
Their spouses don’t get what they deserve.
Their kids don’t get fair splits of the inheritance.
It’s usually a mess and never turns out how the family wants it to.
Fill out the form below if you don’t want the government to be in control of your inheritance.