Is an Executor of a Will Bound to Set Up Testamentary Trusts Specified in the Will?
Executors are bound to do many things during the probate process. If an executor is also named trustee of a testamentary trust, the executor must set up and oversee the trust with the assistance of a probate court. However, an executor is not bound to set up a testamentary trust if another individual is named trustee.
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Testamentary Trusts
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Testamentary trusts operate like other trusts in that they require funds, beneficiaries and a trustee. Testamentary trusts, however, differ from other trusts because they are included in a last will and testament. Often, these trusts are created for minor children, particularly when the estate is large and children stand to inherit a considerable amount of money. Whomever is named as the trustee is a fiduciary, meaning he has a responsibility to oversee the trust and distribute funds to named beneficiaries.
Trustee's Duties
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As a fiduciary, a trustee owes a duty of care to all beneficiaries. He must protect trust funds, provide accounting and make scheduled distributions. For example, if the terms of a testamentary trust state that a beneficiary is entitled to a certain sum when he reaches 18 years old, the trustee must disperse that sum on the specified date.
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Executor as Trustee
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An executor is bound to set up a testamentary trust if he is also named trustee. However, the executor and the trustee do not have to be the same person. If an executor is also named trustee, he must set up the testamentary trust; however, the probate court functions to assist him in setting up the trust. As such, testamentary trusts must go through probate; the probate court will oversee a testamentary trust until the last distribution is made.
Additional Considerations
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Often, wills containing testamentary trusts for minors also name a guardian; the guardian, executor and trustee do not have to be the same person. Attorneys or financial institutions are often named trustees of large testamentary trusts, as the fiduciary responsibility and liability is significant.
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