Creating an estate plan requires many decisions, all of which should be made carefully. Two of the most important decisions are choosing an executor and, required, a trustee. Both positions involve carrying out the wishes of the decedent for a significant period of time after he or she dies.
Choosing an executor
An executor is responsible for assembling or taking custody of the decedent’s assets and carrying out the instructions in the decedent’s will for the disposition of those assets. As such, the executor should have both financial sophistication and patience. Among the tasks that must be performed by the executor are the gathering of the decedent’s assets, paying bills, preparing and submitting state and federal tax returns, and preparing and submitting various forms to the probate court to facilitate the transfer of assets to the beneficiaries designated in the will.
Many people who prepare a will want to choose close friends or siblings as executors. These individuals may not possess either the skill or experience to carry out the executor’s responsibility. In such cases, the person who is making the will may wish to appoint a co-executor, such as an attorney or professional executor such as the trust department of a bank, as a co-executor.
If the designated executor is plainly incompetent to manage the decedent’s estate, the probate court may disqualify that person and appoint a substitute executor.
Appointing a trustee
Not every estate plan includes a trust, but most well-off individuals will create one or more trusts to handle specific assets or support specific uses. Unlike an executor, whose term ends when the court accepts the final accounting, a trustee may be required to serve for many years after the trust settlor dies. The trustee is usually named in the trust document. Depending upon the age of the settlor and the designated trustee, the settlor may name an alternate trustee in the trust document. Individuals without extensive experience in financial matter may not make the best trustees. A common solution is to nominate a professional trustee such as a lawyer or bank trust department.
Making informed decisions
Choosing a trustee or executor is an extremely important decision. Anyone who is creating an estate plan will most likely have retained an experienced estate planning attorney for assistance. A capable attorney can provide useful advice on the characteristics that make an effective executor or trustee.