Tuesday 10/4 Post:
Many clients ask what the difference between a trustee and executor is. While they are often the same person, they don't necessarily HAVE to be.
Here’s how it works:
- Often a trust is set up to own and manage assets, and to avoid probate. A “living trust” is managed by a trustee who is generally the person who created it, also called a “grantor” or “settlor”. When that person passes away, a successor trustee is appointed, and the trust gets its own tax I.D. The successor trustee is tasked to wrap things up, often paying bills and distributing trust assets to loved ones. In a sense, the trustee is the CEO of the trust.
- In a similar way, an executor is the CEO of a person’s estate. Assets which are not owned in trust, which do not name a beneficiary, and which are not jointly owned, will pass per instructions in a person’s will. “Probate” is the process to declare a will valid and appoint an executor who has authority to manage assets in the estate.
If you need help understanding present plans, or want to put new plans in place, feel free to contact me at firstname.lastname@example.org or 914-923-1600.
Thursday 10/6 Post:
What else do you need to know about trustees versus executors? Can they be the same person?
Even if a living trust owns 99% of your assets, the estate is responsible to pay final bills, file final tax returns and pay income or estate taxes due. Often, if the estate has no assets, but the living trust does, the executor will need funds from the trust, to close out the estate. For that reason, coordination is needed between the two entities - your trust and your estate.
Clients often appoint the same “trusted” person as executor and trustee. This makes sense because coordination between the two is often required. While parents may agonize about which child to appoint in which role, or fears of “offending” a child by only appointing one among several, the rule of thumb is to appoint the child/children who are the most capable to make sure this work gets done efficiently, in a timely manner, and with the least distress for all those involved.
Have more questions? Contact our offices at email@example.com or call 914-923-1600.