When a person passes, they leave behind all their money, assets, debt and property. Together these make up the estate of an individual. In New York, an executor and trustee are essentially the same in that an owner of an estate gives them the fiduciary duty to manage their estate upon death. However, they differ in their legal obligations.
How are their legal obligations different?
An executor has a fiduciary duty to a will. A will is a written legal document that states the testator’s final wishes. The executor is responsible for collecting the assets indicated in the will and paying the debts and taxes due from the estate. They must also follow the will regarding the distribution of the estate to the beneficiaries. The will may or may not need to undergo probate, but if it does, then the executor will also oversee probate proceedings. An executor only executes what is in the will and has no duties until the testator’s death.
A trustee, on the other hand, has a fiduciary duty to a trust. A trust is a legal entity that holds an individual’s assets and sets the terms of management of the assets. Trustees will manage and distribute the estate for the benefit of the beneficiaries named in the trust. A trustee’s duty may begin when a trustor assigns a trustee. The trustee can make investments, pay taxes and debt, or make significant financial decisions if they see it is in the best interest of the beneficiaries. A trustee does not go through probate.
Choose the right trustee and executor
For smaller estates, you may just want to assign an executor. It is more affordable and writing a legally valid will is less complicated than creating a trust arrangement. If your estate is on the larger side, writing a will and setting up a trust may be a good idea. The executor and trustee can be the same person, so make sure you choose someone on whom you can rely. It must be someone who will put the interests of all the beneficiaries first.