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Monday, October 28, 2013

Choosing an Executor, Trustee and Guardian

Clients frequently ask me for advice on who they should name as Executor, Trustee or Guardian when creating their Last Will and Testament.  First, let me explain the difference between the three roles.
 
The Executor is the person who probates your Will, goes into your house and looks through all your things, safeguards your assets, gathers up your money, pays your bills, files any income tax, estate tax or inheritance tax returns that need to be filed, and then distributes the balance of your money according to the instructions in your Will.  One or more individuals or corporate fiduciaries can serve as Executor.
 
The Trustee is the person who takes the assets that the Executor (or Grantor) gives him, invests the money in a prudent fashion, and distributes the money to the beneficiary of the trust in accordance with its terms.  One or more individuals or corporate fiduciaries can serve as Trustee. 
 
The Guardian is the person who will raise your minor children until they are 18 (or longer for an incapicitated individual). 
 
The three main qualities that you want to look for in an Executor and Trustee are:
  1. Someone that is trustworthy and won't steal the money;
  2. Someone that will not be overwhelmed by the role, there is a lot of work involved; and
  3. Someone that does not have a bad relationship with the beneficiaries and will be able to communicate with them.
You will notice that I did not say that the exeuctor or trustee must be good at investing money.  That is because I believe the other characteristics are much more important.  An honest person who is diligent can always hire an investment manager. They just need to keep an eye on the investment manager.

The three main qualities that you want to look for in a Guardian are:
  1. Someone that will love and care for your children;
  2. Someone that will raise your children in a manner that you wish (including religion, education, diet, etc.); and
  3. Someone that will have a stable family household.
Frequently, clients will name one party as executor or trustee and another person as guardian.  Sometimes this can be a good idea as the two parties can then monitor each other.  Additionally, this is a way to get two parts of the family to interact.  However, if there is someone that you truly trust to serve in all three roles, it is usually best to name them and not divide the roles just for the sake of dividing the roles.

For all of these positions, age may be a factor as well as you may not want to name someone too young or too old.  It is a heavy burden to put on people.  I never, ever recommend naming people just so they won't feel excluded. 

Finally, an attorney can serve as an Executor or Trustee, but you can name whomever you wish.

2 comments:

Anonymous said...

can an attorney who serves as trustee also be the executor? Most recently noticed, some checks state trustee and some state executor that are issued to my Mom from a trust that has been paying since 2003?

Kevin A. Pollock, J.D., LL.M. said...

Dear Anonymous of 8/7/15,

Technically the jobs of executor and trustee are different. If you are receiving checks from an estate and a trust since 2003, I think you better ask for some help. There is probably no good reason for an estate to be open for over 12 years and it sends up a red flag.