What Is an Estate Trustee?

Estate Trustee

A trust is an estate planning tool a person creates to hold assets from the estate during their lifetime. A trustee is a person appointed to manage the trust assets on the beneficiaries’ behalf. The trustee has to act in the beneficiary’s best interest and adhere to the trust document. They manage the money and carry out the instructions given by the grantor in the trust agreement.

The estate trustee is often an estate attorney chosen by a person to protect the assets held in their estate after they die. Such a trustee has the legal authority for the trust management of all the assets in the deceased’s estate until it has been settled by the executor or on behalf of the executor.

Kevin C. Martin, Attorney at Law, PLLC, can help you formulate an estate planning strategy that reflects your wishes. In this article, we delve into the crucial role of estate trustees and how they play a vital role in managing and distributing the trust assets of a person after their passing.

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Key Terms Surrounding Estate Planning

  • An executor is a person named in a will who manages and helps settle a deceased person’s estate as per the instructions given in the will. Their responsibilities include paying outstanding debts, distributing assets to beneficiaries, and following the will’s instructions.

  • grantor is a person who creates a trust and transfers assets they own into trusts created for the benefit of their beneficiaries.

  • beneficiary, such as a spouse or children, is designated to receive specific assets (including trust assets) or benefits from a trust, last will, or legal arrangement according to the deceased’s wishes.

  • successor trustee is a person or entity named in a trust responsible for managing the trust if the original trustee can’t fulfill their duties or legal obligation.

  • Joint trustees refer to two or more individuals or entities who manage a trust together to make decisions and fulfill the obligations outlined in the trust document.

How Does One Become an Estate Trustee?

To become an estate trustee, a person is usually appointed in a will by the deceased as their personal representative for the estate administration process. This role, often synonymous with terms like ‘executor’ or ‘personal representative,’ involves managing and distributing the deceased’s assets according to the terms outlined in the will.

If no will exists, the local court or probate court may appoint an estate trustee. The process begins by filing the death certificate and necessary documents with the probate court, initiating the probate process.

Estate trustees handle various responsibilities, including paying taxes, managing investment accounts, and ensuring assets are distributed as per the will’s instructions or state laws if no will exists. Both executors and personal representatives must adhere to legal requirements throughout the estate administration.

What Does a Trustee Do?

A trustee has various responsibilities, but their main objective is to follow the directions outlined in a trust document. Their roles include the following:

  • Acting as a fiduciary and financial advisor to protect investments, assets, and trust property.

  • Overseeing assets until minor children named as the trust’s beneficiaries reach a certain age designated in the estate plan to receive distributions.

  • Making investment decisions to preserve, administer, and distribute assets according to the trust document’s directions when necessary.

  • Making ongoing decisions related to payment from a bank account and other provisions within the trust.

  • Additionally, trustees are responsible for maintaining accurate, detailed records, filing tax returns, communicating with beneficiaries, and disseminating information as needed. As circumstances change, a trustee’s duties may change as well prompting them to take on other responsibilities.

In cases where you establish a trust, you often initially serve as both the grantor and trustee, granting you more flexibility in decision-making. However, a designated successor trustee assumes the role if you become incapacitated or upon your death. Consider talking to Kevin C. Martin, Attorney at Law, PLLC, to better understand a trustee’s role.

Unique Situations That May Require a Trustee

In special situations, people turn to a trustee to manage their assets according to specific needs. For instance, families with a relative having special needs may set up a trust under the guidance of a special needs planning attorney. This type of trust enables them to offer such a family member ongoing care and financial support.

Other situations include minors as beneficiaries, complex family dynamics, charities, and asset protection. Business owners may also use trustees for smooth business succession and to minimize taxes. Trusts can also offer privacy by bypassing public probate.

A trustee ensures asset management aligns with the individual’s wishes in these unique situations.

Who Can Be Named as a Trustee?

Many people choose a close family member like a spouse, adult child, or sibling as trustees. Family members often understand your values and goals well, which helps them follow your wishes. Close friends who know your intentions and values can also be your representative. They know you personally and can make sure your wishes are respected.

Some people prefer professionals like lawyers, accountants, or financial advisors to be trustees. These professionals are skilled at handling money matters and can give neutral advice. There are also financial institutions or trust companies that can be trustees. You can even elect joint trustees. For example, a family member and a professional or corporate trustee could collaborate.

Remember, there’s no one-size-fits-all choice for a trustee. Each situation is different, so the choice depends on your circumstances. Consider obtaining help from an experienced estate planning lawyer to guide you in making a sound decision.

What Are the Differences Between an Executor and a Trustee?

Executors and trustees have distinct roles in managing assets after someone dies. An executor oversees a deceased person’s estate per the instructions enshrined in the will. The estate includes everything the person owned, like personal belongings and property. The main job of an executor is to distribute the estate’s assets to individuals per the terms of the will.

Executors are required to follow the law and act in the best interests of the deceased and the beneficiaries who inherit the assets. The responsibilities of an executor last for a long time. If new assets are found after the estate is settled, the executor has to reopen the estate and distribute those assets according to the will. Executors are usually chosen by name in a will, but sometimes, even if not named, they can still be appointed based on the will’s intention.

In contrast, an estate trustee handles trusts and nothing besides the trust. A trustee’s responsibility continues until the trust is dissolved, its term ends or all the assets have been distributed as per the trust document’s terms.

How an Estate Planning Lawyer Can Assist You

Being an estate executor or trustee is challenging and needs patience and emotional fortitude. An estate planning lawyer may assist you in different ways. Kevin C. Martin, Attorney at Law, PLLC, can assist in making a legal will to decide how your estate will be settled and who takes care of your children. We can also set up powers of attorney to protect and honor decisions regarding your health and money.

If you need advice on trusts or help with estate planning, contact Kevin C. Martin, Attorney at Law, PLLC, to schedule a free consultation today!

Frequently Asked Questions

Can an Executor and the Trustee Be the Same Person?

You can have the same person acting as executor and trustee. It is common since entrusting someone with settling an estate is a big decision. This arrangement can help simplify matters. However, carefully consider the responsibilities and duties of each role.

How Is a Trustee Paid?

Trustee compensation is generally covered by the trust’s assets. The terms outlined in the trust document determine the payment frequency, whether yearly, twice a year, or, more commonly, quarterly.