The Trustee and Executor
What is a trustee?
A trustee is the person or entity (such as a bank) that is put in charge of certain responsibilities such as: securing the assets of the trust, engaging with a financial advisor or investment firm (or making investment decisions themselves depending on complexity or of trust assets and the trustee’s personal experience), hiring an attorney to navigate trust compliance, hiring an accountant to prepare state and federal income tax returns for the trust, make distributions from the trust for the payments of bills and expenses, and make final division of trust and distributions to children once they reach a given age (as instructed in the trust document).
How is a trustee chosen?
The initial trustee is named directly in the opening paragraph of the trust document along with further instruction on successor trustees if/when the original named trustee is no longer able to serve as trustee. In most cases, the trustee is usually a family member. It is also not uncommon to have two individuals serve as trustee (co-trustees) and work together to carry out the duties. When deciding on a trustee, parents should find someone who is of age and in good enough health so they are able to carry out as trustee for the entire duration of the trust. Ideally, you’d like your trustee to be highly organized, have a great deal of common sense, and experience with some or a combination of the roles given to the trustee (as mentioned in the prior paragraph). Above all else, when picking a trustee, it’s crucial that they are someone you highly trust that does not have any financial burdens that may impact their objectiveness as trustee.
What is an executor?
The executor of a will (also known as the “personal representative” in Massachusetts) is the person who is responsible for managing the probate estate. When finding an executor, most individuals decide to choose a family member or close friend; sometimes, an uninterested third party is chosen. The executor has a number of duties to carry out such as: organizing assets, distributing funds to the beneficiaries or trustees, paying estate taxes and debts, and if necessary, selling any property.
You’ll notice the generic responsibilities of the executor are virtually the same responsibilities as a trustee with one major difference. The executor is in charge of the probate estate, which may or may not have any assets depending on how a person structured their estate planning. In other words, if a person placed all their assets in trust prior to death, then there is generally no estate to manage. The trustee on the other hand, only has control over assets placed in trust and nothing else. Therefore, if you set up a trust and never have assets titled in the name of the trust (whether that be during life or transferred to trust upon or immediately after your death), then the trustee is left with nothing to manage. That is why it is extremely important to make sure assets are titled correctly.
Being an executor or trustee in Massachusetts…
While all states are different, in Massachusetts the basic requirements for an executor include anyone at least 18 years old and of sound mind. Some states prohibit an executor who has been convicted of a felony, but that is not the case in Massachusetts. Also, in rare cases, a Massachusetts probate court will reject an individual as executor if it is found to be in the best interest of the estate. Although it may be easier to appoint someone living in Massachusetts or closeby, the state does not require it.
Trustees, similarly, must be at least 18 year old and be of sound mind (i.e., mentally competent) to serve in their fiduciary capacity. The creator of the trust may include other additional guidelines for the trustee. For example, depending on the type of trust, there may be a requirement that the trustee be independent and not be subordinate or related to a beneficiary.
As you can imagine, there’s a lot to think about when deciding on the right trustee or executor for your estate plan. If you have any questions or concerns, then feel free to give me a call at (781) 202-6368 or email me at JLento@PerennialTrust.com.
Always happy to help,
Joseph M. Lento, J.D.
Attorney & Owner of Perennial Estate Planning
Other helpful reading:
Can the Executor of a Will Take Everything? (n.d.). https://rmolawyers.com/can-executor-of-a-will-take-everything/
Carlson, Darren R. (2014). Your 1960S Tv Guide To Estate Planning. MOTIVATIONAL Press, INC.
If someone dies owing a debt, does the debt go away when they die? Consumer Financial Protection Bureau. (n.d.). https://www.consumerfinance.gov/ask-cfpb/if-someone-dies-owing-a-debt-does-the-debt-go-away-when-they-die-en-1463/.
