Executors and trustees play similarly important, but fundamentally different roles in managing your estate after your death. Where executors handle a number of legal and bureaucratic hurdles in confirming and administering your will, trustees take responsibility only for administering trusts established during your lifetime or by your will.
Separating Wills and Trusts
A will lays out your wishes for how you want your assets distributed and, in most cases, names a person you trust to carry out those wishes. Large estates or estates that include a business that requires ongoing management often use a bank or law firm as the executor to guarantee access the necessary legal and financial expertise. You can set up two main kinds of trusts to provide assets to family, friends or other recipients of your choice: living and testamentary trusts. Both designate assets that the trustee takes responsibility for delivering to the beneficiary. You establish a living trust while you are still alive. You establish testamentary trusts in your will.
What an Executor Does
The executor you name in the will must perform a number of crucial duties. She must take the will through the probate process, in which the court recognizes your will as legitimate, formally appoints your chosen executor and offers oversight for the distribution of assets. The executor must account for all of your property and assets, as well as settle any legitimate debts you owe. Settling debts can include selling off some or all of your property, if necessary. She needs to make sure any taxes you owe, including estate taxes, get paid. Your executor then distributes any remaining property or money to the individuals or organizations you identify in your will.
What a Trustee Does
A trustee takes no responsibility for the probate process, even if your will establishes the trust. The trustee instead agrees simply to take control of the trust and carry it out by the terms you establish. For example, if you want your grandchildren to receive a lump sum payment when they graduate from college, the trustee agrees to distribute those funds when each grandchild graduates. Trustees, in some cases, take responsibility for investing the assets held in the trust.
Length of Responsibility
An executor of a will remains in place for the duration of the probate process. While every will creates a unique circumstance, most wills complete the probate process within two to three years. A trustee remains responsible for carrying out your wishes for as long as it takes for the beneficiaries to receive their assets. Depending on the terms of the trust, the person you choose can serve as a trustee for years or even decades. Some trusts last for generations and require the selection of new trustees periodically.