Administration of Estates & Trusts
The administrator of a trust is generally known as a trustee, while an estate administrator distributes an estate's assets according to the directions in a will. Both trustees and executors have a number of duties created by state statutes and common law, including fiduciary duties. Those with specific questions about estate or trust administration should consult a legal professional.
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Estate Administration
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When an individual dies and leaves a will, the will often designates a living person to act as administrator of the estate. This individual is known as an executor. If the will makes no such designation, a probate court may choose an individual to perform the same functions; when designated by a probate court, this individual is known as an administator. An executor or administrator's general function is to collect all of the assets in the estate and then see them distributed according to the deceased's wishes.
Executor Duties
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Executors have the responsibility to file a will with the probate court of the state in which the deceased died. Once the court probates the will (or excuses it from the probate process), the executor or administrator must assemble all of the estate assets. His first task is to pay any debts or taxes that the deceased owed on his property (this requirement may also include paying for the funeral). Executors and administrators must fulfill fiduciary duties in dealing with the estate; they must act with good faith and honesty in all dealings with estate property; and may not enrich themselves at the expense of the wishes of the deceased. Executors or administrators who don't fulfill their duties may be removed from their positions and possibly held liable for losses to the estate.
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Trusts
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Unlike a will, a trust may go into legal effect before the death of the trust's creator (the "settlor"). A settlor who creates a trust legally transfers his assets to another individual, the trustee. At the same time, the settlor designates one or more other individuals as beneficiaries. These beneficiaries have the legal right to receive all benefit from the assets in the trust. The trustee's function is to oversee these assets in a way that benefits the beneficiary.
Trustee Responsibilities
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Each state demands a number of fiduciary duties from a trustee. The trustee must act with complete loyalty toward the trust, meaning that he may not use trust assets or funds for his own gain. To this end, a trustee must keep the trust property entirely separate from his own assets. Trustees must invest and grow the trust assets in a prudent manner; each state has its own legal definition of prudent investment. A trustee cannot delegate his duties to a nontrustee. If any beneficiary demands it, the trustee must render an accounting of his use of the assets. Failure to fulfill trustee duties may result in removal of the trustee, and the trustee himself may have to make up any resulting losses to the trust.
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References
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