Trustee vs Executor
The Differences and Responsibilities When Managing and Settling An Estate
Executor vs Trustee Explained...
If you are confused about the differences between a Trustee vs Executor, you’re not alone. We often get asked about this topic at Rochester Law Center.
If you are reading this article, you may be in the process of researching Estate Planning to determine which legal tool is best for you to pass on your money and property to your family and loved ones.
Or, you may be an individual who has just found out that they were named the Trustee or Executor (also known as a Personal Representative) of an estate and you are trying to find out what this all means and what you are supposed to do next.
If you find yourself in either situation, this article will help answer the following:
- What is the role of a Trustee vs Executor?
- What is the difference between Executors and Trustees?
- What are the responsibilities of an Executor/Personal Representative?
- What are the responsibilities of a Trustee?
- Who should be a Trustee or Executor?
What Is The Role Of A Trustee vs Executor?
Both Trustees and Executors/Personal Representatives are individuals who are selected by another person to be in charge of managing that person’s estate after they have passed away.
Executors and Trustees are very similar.
In many states, like Michigan for example, Executors are called Personal Representatives. If we use these terms interchangeably in this article, don’t be confused, we are referring to the same role.
Both Trustees and Executors/Personal Representatives are individuals who are selected by another person to be in charge of managing that person’s estate after they have passed away.
This includes things like settling any outstanding debts and distributing the remaining assets to the heirs of the deceased. This is known as “settling an estate”.
What is an “estate”?
An “estate” refers to all of the money, property, and assets the individual who passed away owned at the time of their death.
What Are The Differences Between Trustee vs Executor?
One of the major differences between Trustee vs Executor is how they are appointed.
A Trustee is appointed in a Trust document, such as a Living Trust, to manage the estate of the person who passed away.
An Executor/Personal Representative is named in a Last Will and Testament, often times referred to as a Will.
The second major difference between Executor vs Trustee is the process they have to go through to settle an estate.
Wills and Trusts act differently.
As a result, the process Executors and Trustees have to go through to settle an estate is slightly different.
To get a better understanding of the differences, let’s take a deeper look at how a Last Will and Testament works and the role of an Executor/Personal Representative.
What Are The Responsibilities Of An Executor/Personal Representative?
A Last Will and Testament is a legal document that gives instructions to the court on how your assets should be distributed when you pass away.
In your Last Will and Testament, you name an Executor/Personal Representative. This is the person you want to settle your estate and make sure that your wishes are executed appropriately.
Their responsibilities include, handling problems with creditors, fighting objections from omitted heirs, managing the transfer of your property, and making sure that each of your devisees or beneficiaries receive their inheritance.
The major drawback of a Last Will and Testament is that your estate must go through Probate – a process that in some cases can take years before your assets are distributed and your the estate is settled.
This means, that the person you want to be your Executor/Personal Representative will be responsible for obtaining Letters of Authority from the Probate Court and guiding the estate through the complicated Probate process.
Getting Letters of Authority and navigating the Probate process can be complex. In some cases Probate can take years, especially if the Will gets challenged.
If you find yourself in the role of Personal Representative and you need help navigating Probate, it’s usually best to consult with an experienced Probate Lawyer.
What Are The Responsibilities of A Trustee?
If one of your goals is to avoid putting your family through the difficulties of Probate Court, you should consider a Living Trust instead of a Will.
If you do choose a Living Trust, you will need to appoint a Trustee to manage and settle your estate when you die. To understand the responsibilities of a Trustee, let’s briefly explain how a Living Trust works.
When you set up a Living Trust, you legally transfer your property into the Trust and manage it yourself while you are alive – just as you do now. This means that while you are alive, you are both the Grantor (person who created and owns the Trust) and the Trustee (person who manages the Trust on a day to day basis).
But, someone needs to manage the Trust after you die so that your assets in the Trust can be distributed to your heirs according to your wishes.
The person you appoint to take over the role of Trustee after you die is known as your “Successor Trustee”. When you pass away, your Successor Trustee takes over as Trustee and manages and distributes your assets according to the strict directions you’ve outlined in the Trust document.
Overall, responsibilities of a Trustee are very similar to those of an Executor/Personal Representative, but there is one big difference…
Trustees do not need to go through Probate in order to settle the estate because Living Trusts avoid Probate Court. This is one of the major advantages of a Living Trust.
If you have recently been appointed Trustee and need help with the Trust Administration to properly settle an estate, you can always reach out to an experienced Trust Lawyer to help.
Who Should Be A Trustee or Executor?
Being a Trustee or Executor is a big responsibility. As a result, you should choose someone that you believe has the ability to manage and settle your estate according to your wishes.
Many people choose a close relative or friend. It’s a good idea to choose someone who is capable enough to handle the responsibility, and ideally, someone who is good at handling money and financial transactions. Most of all, you want to choose someone who is honest.
Conclusion
A Trustee and Executor/Personal Representative have similar roles and responsibilities when it comes to settling an estate. One key difference is that the Trustee is appointed in a Living Trust and an Executor/Personal Representative is named in a Last Will and Testament.
The second major difference is that a Trustee does not need to go through Probate to settle an estate because Living Trusts avoid Probate Court.
If you are trying to determine if a Will or a Living Trust is the best Estate Planning tool for your situation, or if you have recently found out that you have been named Trustee or Executor/Personal Representative and you are unsure of what to do next, an experienced Estate Planning Attorney can help you.
Over the past decade, we’ve helped 1,000s of clients with all matters of Wills, Living Trusts, Probate, and the settlement of estates.
If you have questions and you’d like to set up a free initial consultation, we’d be happy to help. Just give us a call at (248) 613-0007 to schedule a consultation with an experienced Estate Planning Lawyer.
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Written By Chris Atallah - Founder, Rochester Law Center, PLLC
Written By Chris Atallah - Founder, Rochester Law Center, PLLC
Chris Atallah is a licensed Michigan Attorney and the author of “The Ultimate Guide to Wills & Trusts – Estate Planning for Michigan Families”. Over that past decade, Chris has helped 1,000s of Michigan families and businesses secure their futures in all matters of Wills, Trusts, and Estate Planning. He has taught dozens of seminars across the State of Michigan on such topics as avoiding the death tax, protecting minor children after the parents’ death, and preserving family wealth from the courts and accidental disinheritance. If you have any questions, Chris would be happy to answer them for you – just call at 248-613-0007.
