An Executor or Personal Representative is the term used to describe the court-appointed representative of an estate where the decedent left a Will. An Administrator is a term used to describe the court-appointed representative of an estate where the decedent did not leave a Will. You may see the terms “Executor,” “Personal Representative,” or “Administrator” used interchangeably. They are in fact the same role, and the person appointed to the role carries out the same responsibilities. However, different states refer to the name of the role differently. For example, the state of Florida uses the term ”Personal Representative,” while the state of New Jersey uses the term “Executor.”
Following a death, an Executor/Personal Representative/Administrator is appointed to act on the behalf of the deceased and handle all tasks related to settling the estate. They have a legal responsibility (called a “fiduciary duty”) to follow the instructions and manage the wishes and affairs set forth in the Will or outlined by state law if there is not a Will. This includes collecting assets, valuing property, paying bills, safeguarding assets, and distributing the estate. The role of an Executor/Personal Representative/Administrator is very intense and often feels like a full-time job. In fact, many describe it as the worst full-time job in the world. Trustate was founded to ease the burden for all stakeholders involved in the estate administration process.
Trustee(s) and Successor Trustee(s)
The Trustee or Trustees are the person or persons named in a Trust ) to manage the assets owned by that trust pursuant to the terms outlined in the governing document that created the trust (also known as the “trust document” or “trust instrument”). In the trust document, the Grantor of the trust (i.e., the person who created the trust, also known as a Settlor or Trustor) does the following:
- lists out rules for the Trustee(s) to follow,
- identifies beneficiaries (i.e. those permitted to receive assets from the trust),
- gives the Trustee(s) powers and limitations as to how they can manage the assets owned by the trust,
- establishes the terms under which the Trustee(s) can (and cannot) make distributions to the trust’s beneficiaries and what assets can (and cannot) be distributed, and
- usually identifies successor Trustee or Trustees who can take over as Trustee if the current Trustee is unable or unwilling to act at some point in the future.
The role of the Trustee has similarities to the role of an Executor, in that the assets of the trust must be managed as set forth in the trust document. There are two situations where a Trustee plays an active role in an estate administration: (1) When there is a testamentary trust; and (2) when the decedent’s estate plan consists of a “pour over Will” and “Revocable Trust.”
A “testamentary trust” is a trust that is created in someone’s Last Will and Testament. It usually looks like an article or section within the Will that instructs a “the trustee” to “hold assets, in trust,” and sets forth the terms of how that trust is administered and for whom it benefits. If there is a testamentary trust present in the decedent’s Will, the Will should likely also contain a section that names someone to act as “trustee” and may possibly name successor trustees as well. Sometimes the named executor and trustee are the same person, sometimes they are different people. In this scenario, the Executor will still be the one tasked with carrying out the estate administration and will follow the instructions in the will to distribute the assets earmarked for the trust to that named Trustee, to hold pursuant to the terms in the Will. Only at this point does a Trustee of a testamentary trust take over the responsibility of managing the specific estate assets that were given to him/her by the Executor.
In many situations, but particularly in the context of an estate administration where the decedent’s estate plan used a “pour over Will” and “Revocable Trust” (also called an “Inter Vivos Trust” or “Living Trust”) format, the successor Trustee(s) will play a larger role in the estate administration. Usually, in this scenario, the grantor is also the initial Trustee, and the Trustee who acts during the estate administration is one that was named in the trust document as the decedent’s successor Trustee. At this point, the successor trustee assumes the role of Trustee, and in doing so, assumes responsibility for managing the finances and other assets owned by the trust (ultimately, the decedent’s entire estate). Once all of the assets of the estate are moved into the Trust at the close of the estate administration, the Trustee will continue to manage and/or distribute the assets of the trust pursuant to the terms of the trust document.
It is important to note that in the Revocable Trust context where the grantor is the initial trustee, the role of a trustee may become effective before the grantor dies, should they become incapacitated. Following the grantor’s passing, the Trustee will usually be the one to contact an attorney to review the details of the estate. This person is usually generally responsible for keeping trust beneficiaries informed and inventorying estate assets to determine their value. He/she will also be responsible for any partial distributions that are to be paid out, filing the final tax returns, and finally distributing assets to the beneficiary as the trust directs.
Substitute/Successor Executors and Trustees
A substitute executor/trustee is a person named in the Will or Trust that will take over the role of executor/trustee if the original person named is unwilling or unable to act. A named executor or trustee may be unable to perform their duties for a number of reasons, such as the person named:
- Has died and the Will & Trust were not updated to account for this change;
- Is unwilling to act;
- Is an ex-spouse and unwilling to act;
- Is incapable of acting because of mental incapacity;
- Is a minor;
- Dies during the administration.
A guardianship is a legal process that is used to protect vulnerable individuals who are unable to care for themselves, often a minor child or an adult who has been adjudicated as disabled. There are actually three types of guardianships:
- Guardian of the person,
- Guardian of the property (or, in some states “the estate”),
- Guardian of the property and person.
A guardian of the person is one whose responsibilities are to care for their ward’s physical and personal needs. This may include making medical decisions on their behalf, as well as, financial decisions. For example, if a parent passes away, and their child is a minor, a family member or close friend may be named as guardian to ensure that this child is well cared for.
A guardian of the property is responsible for overseeing financial matters on behalf of their ward.
For minors, a guardian of the property is responsible for managing and protecting any money and property owned or inherited by the child. For adults, guardianship of the property or estate is used for those who cannot manage their own financial affairs, but who have enough income or assets that preserving and protecting the ward’s estate is necessary. As with a guardian of the person, the guardian of the estate for an adult may be required to regularly report to the court on the status of the ward’s assets, with a clear accounting of how money was spent to cover the ward’s expenses.
A guardianship of the person and property combines the duties outlined above. The guardian will be responsible for not only protecting their ward personally but also be responsible for managing money and property on his or her behalf.
This term is used in two ways. Some professionals refer to a legatee as the person who inherits personal property as outlined in the Will. Personal property is considered all property, except real property, that belongs to a person’s estate. Examples of personal property may include art or a baseball card collection. Others use the term more broadly, and simply use legatee as a term to describe beneficiaries of an estate that are specifically identified in the decedent’s Will.
A person who inherits real estate, or real property as outlined in the Will. It is important to note that often devisees and legatees are the same person(s).
A beneficiary is an individual or entity who is entitled to receive all or a portion of someone else’s assets. They can be a person or charitable entity named in the decedent’s Will or Trust (or designated under the relevant estate’s intestacy laws if there is no Wil) who is entitled to all or part of the estate. The form of that inheritance could be anything from life insurance to a car depending on how it is outlined in the Will.
Additionally, this person may be specifically named as beneficiary of a financial account that passes to them outside of a Will/Trust contact.
Heirs are a person’s blood relatives, surviving spouse (if applicable), and any adopted children. Parents, siblings, grandparents, nieces and nephews, aunts and uncles, and cousins are also heirs. Heirs become a main focus in the administration when a person passes without a Will. When this happens, the estate is administered in accordance with that particular state’s intestacy laws. State intestacy laws govern essentially ‘who gets what from the estate based on the order in which the heirs will inherit. The order and percentages differ from state to state.
The creator/maker of a Will. The person who signed the Will. Note that this is not the attorney-draftsperson. It is the client whose Will they are preparing on his or her behalf.
The maker of a trust. The person who signed the trust and contributed funds to it. Note that this is not the attorney-draftsperson. It is the client whose trust they are preparing on his or her behalf.
The attorney-draftsperson of a Will or Trust.