When dealing with estate planning, you might encounter terms like “executor” and “trustee.” While these roles share similarities, they serve distinct functions in managing a person’s assets after death. Knowing the key differences between executors and trustees helps you better understand their roles in estate administration.
The role of an executor
An executor manages a deceased person’s estate according to their will. This role involves several important tasks:
- Gathering and protecting the deceased’s assets
- Paying off debts and taxes
- Distributing remaining assets to beneficiaries
- Closing the estate
Executors typically complete their duties within a year or two after the person’s death. They must follow the instructions outlined in the will and adhere to state laws governing estate administration.
The responsibilities of a trustee
A trustee, on the other hand, manages assets held in a trust. Their responsibilities include:
- Administering the trust according to its terms
- Managing and investing trust assets
- Distributing assets to beneficiaries as specified
- Maintaining accurate records and filing tax returns
Unlike executors, trustees may serve for extended periods, sometimes for years or even decades, depending on the trust’s terms.
Key distinctions between the two roles
The main differences between executors and trustees lie in their scope of authority and duration of service. Executors manage the entire estate, while trustees manage only the assets placed in a trust. Additionally, executors typically serve for a limited time, whereas trustees may have long-term responsibilities.
It is important to note that there are cases when the same person can serve as both executor and trustee. This situation often occurs when a will creates a testamentary trust, which typically comes into effect upon the testator’s death.
Understanding these roles can help you make informed decisions when planning your estate or fulfilling duties as an executor or trustee.
If you are unsure about the responsibilities in either role, it may be best to consult with a qualified estate planning attorney for guidance.