What They Are and How to Choose Them
You need to make many important decisions as you navigate the estate planning process. Some of these decisions include choosing the appropriate people to manage your assets, make decisions on your behalf and take care of your loved ones. Three common estate management roles that are often confused include executors, trustees and guardians, but it’s important to select the right people to fill each of these roles.
An executor is a person or entity responsible for managing the estate of a deceased person. The executor is responsible for ensuring the wishes of the deceased are carried out and is typically appointed by an individual in their will. An executor has a legal obligation to act in the best interest of the estate and its beneficiaries when distributing the estate’s assets.
When naming an executor, it’s important to choose someone who is trustworthy, responsible, organized and capable of handling complex financial situations. You may want to choose someone with a financial or legal background who can help navigate the various challenges of liquidating an estate.
A trustee is a person or entity responsible for managing a trust. The assets within the trust are transferred to the trustee who is then responsible for managing those assets on behalf of the trust’s beneficiaries. A trustee’s specific responsibilities may include coordinating an appraisal and/or sale of real estate, preparing personal and fiduciary tax returns, paying bills, contacting beneficiaries, closing credit cards and other lines of credit, and much more — all while complying with various legal requirements.
Like executors, trustees have a fiduciary duty to act in the best interest of the beneficiaries. The trustee must manage assets in the trust prudently and according to the terms of the trust. Depending on the terms of the trust, the trustee may have the power to make investment decisions, distribute income and principal, and manage the trust’s assets.
When naming a trustee, you’ll want to look for many of the same characteristics as when choosing an executor. It’s important to choose someone who is trustworthy, responsible, organized and capable of handling complex financial situations. Again, it may make sense to choose someone with a financial or legal background.
Some people choose to appoint a corporate trustee instead of an individual. Corporate trustees are in the business of administering trusts and estates and are regulated by external agencies and internal auditors to help ensure they’re meeting the obligations of the trust. A corporate trustee serves as a neutral third-party and can therefore administer the trust in an unbiased manner.
A guardian is the person you name in your will to care for your minor children if you die before your children reach the age of majority. The guardian makes decisions as a parent would, including decisions related to education, healthcare and the child’s general welfare.
Choosing a guardian is one of the most important estate planning decisions you will make. It can be difficult to choose the right guardian to raise your child(ren) according to your values and provide a safe, stable, loving home. Before naming a guardian, be sure to have a conversation with that person to ensure he or she is willing to take on the responsibility of caring for your child.
Could you use some help making estate planning decisions? Creative Planning is here for you. Our team of in-house estate planning attorneys works alongside your wealth manager to help ensure all aspects of your estate and financial plan are working together to achieve your goals. For more information, schedule a call with a member of our team.