A crucial part of estate planning is drafting a final will. This legal document dictates how your assets are distributed upon your death. However, there is so much more to estate planning than this. You may wish to utilize other instruments, such as trusts, which are distinct from wills.
Once you have drafted these documents, different people will be tasked with ensuring that they are implemented according to your wishes. The person who makes decisions regarding your will is known as the executor, and for a trust, the individual is known as the trustee.
What exactly is the difference between an executor and a trustee?
The role of an executor
Should you pass away, the executor will be tasked with distributing your wealth and assets in line with your final wishes. They will also need to inform relevant parties of your death, which includes family members, creditors, government agencies and your heirs.
If you pass away with outstanding debts, the executor will also need to ensure that these financial obligations are honored. Debts will not usually pass on to the heirs of your estate, but they must still be settled by using the assets in the estate. The same goes for any outstanding tax bills.
It’s possible that the will may need to go through probate, which is a court-based process aimed at validating the will. However, if all of your wishes are carried out appropriately by the executor, the probate process can be avoided.
The role of a trustee
While a trustee and executor have similar obligations in the sense that they are fiduciaries, trusts and wills operate differently.
Unlike wills, many trusts do not distribute assets immediately upon your death. A trustee may have to oversee and manage the distribution of assets to the beneficiaries for several years. Parents often utilize trusts to ensure that their minor children have financial stability when they grow up. A trustee is responsible for ensuring that this goes according to plan.
When making plans for your estate, it’s crucial to have accurate information. Seeking legal guidance as you take your next steps will help ensure that your final wishes are carried out as intended.