Creating your Will is something that you probably don’t often talk about. But it is important to ensure your assets are managed responsibly, even if you aren’t in a position anymore to do so. If your assets are managed in a trust, having a trustee appointed is key. To choose the right person for the job, you need to know about the role and responsibility of a trustee.
I think about it like this: It is only fair to leave behind a set of rules on how to deal with the assets you leave behind. Doing so will eliminate any ambiguity about how to deal with it. This can prevent any disagreements or conflicts that can arise in the absence of a will. I think having a clearly defined will is a gift you can leave behind, and that’s the way you should think about it.
An important aspect of all of this is estate planning. This isn’t just something that only wealthy people need to do. Estate planning is an essential cornerstone that prevents leaving your legacy in the hands of the court.
One important aspect of your Will with a Trust is the role and responsibility of a trustee. Two different roles are part of your will, namely, the executor(s) and the trustee(s). It is important to know the differences between them. Knowing more about this topic allows you to make the right choices and to name the correct people to perform those duties for you.
You don’t need to use a trust with your will.
What Role Does A Trustee Have In A Will?
In simple terms, the trustee in a will manages all the assets and decides when and how they are distributed to all beneficiaries based on the trust agreement.
A trustee has fiduciary duties, which means that he has to act in the best interests of the beneficiaries. He is tasked with the high standard of providing reasonable care. His goal is to preserve the value of the trust funds as best he can.
What Is A Trust In The First Place?
Generally speaking, a trust is a legal shield and an agreement that protects all contained assets and defines the terms of the trust. These types of assets can be real estate, investments, money, and more. It regulates their use and distribution based on the intentions of the writer of the will (aka Testator).
In the context of a will, you refer to the trust as the Will Trust.
One of the main reasons to set up a trust in a will is that it’s possible that the beneficiaries aren’t of full age at the time death happens. After all, we cannot know when we will leave this earth.
Another reason could be that a beneficiary lacks the mental capacity to manage the inheritance.
You can structure a trust in many ways. Examples are distributing income to your spouse, or regulating how the inheritance is passed down to the next generation. There are many different options available.
What Responsibilities Does A Trustee Have In A Will?
As mentioned before, the trustee has a fiduciary duty. He has to ensure that he keeps all beneficiaries’ best interests at heart.
This can mean that he is managing the inheritance and its distribution for a long time, depending on the type of trust agreement.
The main role and responsibility of a trustee are (source):
- Share copies of the trust document with beneficiaries
- Get a copy of the death certificate
- Notify relevant parties of the death
- Coordinate with the executor
- Manage the trust
- Distribute assets
Differences Between Executor And Trustee
The roles of the executor and trustee aren’t the same. The executor of the will is responsible for executing the plan you’ve put into your will. His job ends when the inheritance is paid out to all beneficiaries.
That’s when the job of the trustee starts. The role and responsibility of a trustee are based on a trust agreement. This document defines how the inheritance is being paid out. You also refer to that as the trust administration.
When the trust is revoked, its term ends or all assets are distributed, the job of the trustee ends. This can be many years after the testator’s death.
| Executor | Trustee |
|---|---|
| Last Will and Testament | Trust Agreement |
| Files your will | Share declaration of trust |
| Notifies relevant parties of death (beneficiaries, family, government agencies, …) | Notifies relevant parties of death (beneficiaries, companies with account in the trust’s name, like banks, life insurance companies, …) |
| Find and secure assets | Manage the trust |
| Pay debtors and taxes | Distribute assets to beneficiaries |
As you can see, the jobs of the executor and trustee of a trust are quite different, although they have some shared responsibilities.
Related Post: How To Avoid Paying Capital Gains Taxes On Stocks
How To Choose Your Executor And Trustee?
Your choice of executor and trustee is deeply personal. It can be a family member, a friend, a lawyer, or a trust company.
Take some time to think about your family dynamics and relationships and try to imagine how they will play out in certain scenarios.
First of all, there is nothing that prevents you from appointing the same person to be the executioner and trustee.
If you want different choices, take into account that they will have to work closely together. You want to make sure that the people you choose get along well. This is a good foundation since they will have to coordinate for a longer time.
If your choice is a friend or family member, it is a good idea to talk to them beforehand. Get a feeling if they would like to take on this job for you. Also, let them know what the trustee’s responsibilities would be.
Another option is to hire a financial advisor, lawyer, or trust management company to take on the job for a reasonable compensation. A third party will not be affected by family dynamics. They will execute your will and trust precisely how you planned it.
Can A Trustee Decline An Appointment?
Maybe it just is too much work for you at the moment, or other reasons that prevent you from taking on the job of a trustee. Whatever it is, you can decline your appointment as a trustee. All it takes is a written notification and written approval from the court.
If you decline, a new trustee may have to be named. You can sometimes find a named successor in the trust documents. But if not, it is up to you as the original trustee or the trust beneficiaries to appoint a successor trustee.
Final Thoughts – What’s The Responsibility Of A Trustee In A Will?
Having a will is an essential piece everyone should think about. Proper estate planning and financial management are wonderful foundations to have.
This blog post provides a basic understanding of a Will Trust and everything that comes with it. We talked about the type of assets a trust can contain.
You now also know the role and responsibility of the trustee. Working with the executor, he ensures that the assets are distributed in a timely manner according to the trust documents and terms of the will.
When the time comes to choose a trustee, you have all the information at hand to make an informed decision.
Disclaimer: The information in this blog post should not be considered financial advice or legal advice. They are solely provided for informational purposes. Please consult with a financial professional for any specific questions on your financial situation. Furthermore, consult with a legal expert for any legal questions.
