Being named as the executor of someone’s estate, or the trustee of a trust, can seem like an overwhelming responsibility. In order to avoid being overwhelmed, it is important to understand your duties as executor or trustee. While below are some of the basics concerning your new duties, the advice of legal counsel while managing an estate or a trust can be very beneficial.
The difference between a trustee and an executor
While the duties share some commonalities, an executor is responsible for managing the estate and setting the affairs of a deceased individual. A trustee is considered the legal owner of a trust and is responsible for managing its assets, filing tax returns and handling the asset distribution as stated in the trust’s terms.
Expectations of the executor
In general, the executor is required to represent the estate for legal purposes. This includes hiring an estate attorney and attending any court proceedings regarding the estate.
You will also have to manage the affairs and expenses of the estate. Executors use the funds of the estate to pay out any debts or expenses. They also must collect any income that is owed to the estate. Estate assets may need to be appraised and/or revalued, as well.
Another responsibility executors have is filing the estate tax return with the Internal Revenue Service. Prior to filing, executors must request an Employer Identification Number from the IRS to be registered as belonging to the estate. You must also notify the estate beneficiaries to inform them of their interests and distribute any remaining assets to them.
If you decide that the responsibilities of an executor are too much, you can either defer to an alternative individual named in the will or petition the court to name have another executor appointed.
Expectations of the trustee
A trustee has a fiduciary responsibility to the trust. This means that the trustee is always expected to act in the best interests of the trust and its beneficiaries.
At the time you assume your role as trustee, you will have to ensure that not only are the assets that are held in the trust safe, but that they are also under your control. You must understand the terms described in the trust document, as well as know who the beneficiaries are and verify that all prior records are updated and in order.
If the trust document requires it, you may have to invest the assets of the trust. This must be done to preserve the assets for all current and future beneficiaries. This does not mean you have to make investing decisions on your own, however. Instead, it allows you to consult a professional to determine the best options for the trust.
You will be responsible for administering the trust according to its specified terms. This includes distributing assets to the beneficiaries as determined by the trust agreement. Other duties include making decisions on behalf of the trust, preparing any necessary documents such as tax returns and statements and keeping in touch with the beneficiaries on a regular basis.
If you decide that you cannot perform the duties of a trustee, the trust agreement should either name a successor or provide you with the information on how to appoint another individual to the role.
If you have been named an executor or trustee, it is important that you understand your duties and options. For advice on managing an estate or trust, contact an attorney experienced in estate or trust management.