I’ve got a pretty short and simple post today on a basic question I think people don’t think enough about. People tend to focus on the division of their estate, but make assumptions about who will administer their estate after they are gone. Deciding who to appoint as your Executor in your Last Will and Testament, or serve as Successor Trustee of a Revocable Living Trust, is probably more important than you realize.
Executor and Trustee Duties and Responsibilities
In general, the Executor of your estate is responsible for overseeing the probate process after your death. The Trustee is responsible for using the assets owned under your Living Trust, or which flow into the Trust after your death. At Clarity Legal Group, about the only time we ever suggest people have an Executor who is not their Trustee is when their us some good reason to name the attorney to serve as Executor, but a family member or institutional trustee for the trust. Here are six key points to consider in choosing an Executor or Trustee:
- Your Executor and Trustees function to secure and manage your assets during probate and trust administration. All your estate assets must be secured and managed throughout the probate and trust administration process. Your Executor is responsible for making sure all of the probate assets are not just identified, but also secured and maintained over the course of the probate process and your trustee during the trust administration. Again, your Trustee and Executor may be the same person (or you may have no Trustee). The probate and trust administration processes occur and the same time, and in many respects are similar. The big distinctions are that probate is a court supervised and public process, which trust administration is private. For probate and trust assets the process may involved closing and consolidating accounts and carefully managing funds. It might also mean physically securing a building and arranging for upkeep for several months. Ask yourself if your prospective Executor and Trustee are capable of managing your estate assets for a lengthy period of time.
- Your Executor or Trustee approves and pays debts of your estate. All creditors of your estate have a right to be notified of probate and allowed an opportunity to file a claim. The person you appoint as your Executor must follow the statutory guidelines for providing that notification and must make a timely decision regarding the approval or denial of each claim that is filed. For people planning through a Revocable Living Trust, the Trustee is typically expected to pay the debts, taxes and expenses and is giving more latitude as to when this occurs and how it is documented. Ask yourself if your prospective Executor and Trustee will be able to thoroughly evaluate claims and only pay those that should be paid.
- Your Executor is responsible for dealing with disputes. Disputes can arise after someone dies. These might be frustrated beneficiaries, disputes with creditors, Will contests, or other litigation. If a dispute arises, your Executor is responsible for managing that dispute. Is the person you are considering comfortable with conflict? Are the too prone to cultivating conflict? Do they have the time to deal with this? Does choosing a family member as Executor make family conflict more or less likely. Your executor will also need to work with your attorney in managing the estate and you will want them to be well prepared to understand when to seek professional advice. Ask yourself though if the person you are consider as Executor as the skills, time and temperament to handle these kinds of challenges and if he/she will hire the right professionals when necessary.
- Your Executor and Trustee may have to sell estate assets. The Executor or Trustee may need to sell assets and may even be force to make unwelcome decisions that could impact the inheritance ultimately passed down to beneficiaries. For example, if your estate lacks sufficient liquid assets to pay all approved claims, estate or trust assets will need to be sold to pay those claims. Beneficiaries of the estate may not agree with the Executor’s decision regarding which assets to sell. Ask yourself if your chosen Executor can make those difficult decisions and if he/she would make the decisions you would make.
- Your Executor and Trust is human and must be able to do all this while grieving your loss and continuing to take care of his or her work and family. The person who serves as the Executor of your estate and Trustee of your Trust will need to have the ability to set aside, or at least compartmentalize, his/her emotions relating to your death and focus on the steps that must be taken to preserve your estate assets and initiate the probate process. Likewise they will need to time to do the job. Not everyone has the ability to do this and, quite frankly, it isn’t fair to expect someone who is overwhelmed with grief to try and administer your estate.
- Naming your children as Executor or Trustee is not and should not be seen as a birth right and not naming them need to be seen as a snub. I have a lot of clients who want to name all of the children to be Co-Executors and Co-Trustees because they love and trust them all. I usually suggest that there are other ways to let them know this. People also are concerned that the Executor or Trustee will be exercising discretion that might be used unfairly to favor one child over another. If this is a concern, let’s not resolve it in how we choose the Executor or Trustee. It can easily be addressed in the language of the legal document, in the provisions for distriubution and the related guardrails established for how discretion is exercised.
Contact Durham Estate Planning Attorney
If you have additional questions or concerns relating to the appointment of about who to appoint as the Executor of your estate, or Trustee for your Trust, please contact the Durham, Chapel Hill, Raleigh area estate planning attorneys at Clarity Legal Group® by calling us at 919-484-0012 or contact us online.
With more than 30 years’ experience in private practice, Mark Costley has helped hundreds of North Carolinians with estate planning, living trusts, financial law, probate, and trust administration. Mark’s work involves elements of teaching, strategic analysis and planning, documentation, and assisting clients in implementing their plans Read More!
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