Many people want assurance that their assets will be managed and dispersed appropriately among heirs after their death. Similarly, sometimes court and various financial institutions also may want to manage people’s assets through an independent party for a certain period.
Executors and Trustees are a group of people who handle this challenging task. Even though in both of these jobs related to asset management and disbursement among others, but the nature of these jobs is completely different.
Executor vs Trustee
The main difference between Executor and Trustee is that the executor follows the term of the will and distributes & transfer the belongings of the deceased person to the heirs, while the trustee follows the term of the trust document and oversee and maintain the asset of the designated trust.
Comparison Table Between Executor and Trustee (in Tabular Form)
| Parameter of Comparison | Executor | Trustee |
|---|---|---|
| Meaning | The executor is someone who administers the will of the deceased person. | The trustee is an individual or a group of people who administers assets for the benefit of others. |
| Appointed by | The local probate court. | Individual, court, or financial institution. |
| Duty | Follow the term of the will as practicably possible. | Follow the term of the trust as practicably possible. |
| Time of work | After the death of a person. | For charity, pensions and retirement plans, trust fund, bankruptcy cases, etc. |
| Fees | In most cases, the executor does not take fees. | In most cases, the trustee takes agreed upon fees. |
| Duration of the job | Short. | Long. |
Who is Executor?
The executor is someone who administers the will of the deceased person. The primary role of this person is to execute the last wishes and manage the financial affairs of the deceased person. Generally, anyone can appoint his executor before his death. In case if he is not appointed earlier, then the court or the testator can appoint him after his death.
To become an executor, the person must acquire a copy of the will of the deceased person. The executor must submit the photocopy of this will to the local probate court to gain authority on this matter.
After becoming an executor, the person must maintain the property until it is distributed among heirs. During this period he should build communication with other governmental agencies and inform everyone about the death of the person.
It is one of the prime duties of the executor to clear all due payments and taxes of the deceased person. He also requires informing all close relatives about death and making arrangements for the funeral.
Most of the time, this job is handled by an attorney. But according to the law, anyone can become an executor. The person must be an adult and must not have any record of a felony. Most of the time (small cases), this job is done without any fees.
Who is Trustee?
According to the legal term, a trustee is an individual or a group of people who administers assets for the benefit of others. The trustee holds the legal title until the asset or the property is handed over to the beneficiary. He also holds the right to decide for the best interest of the beneficiary. By default, he gets the fiduciary accountability to the recipients.
There are various purposes where a trustee can be appointed. Generally, they are appointed for charity, pensions and retirement plans, trust funds, bankruptcy cases, etc. As the authorized person of the trust, the primary duty of the trustee is to manage all the assets for the trust.
The trustee needs to coordinate all tasks according to the provisions delineated in the trust agreement. The trustee also must maintain all the records of transactions and submit taxes on time.
Even though anyone can become a trustee, but most of the time a financial manager does this job. However, the person must not have any conflict of interest for this job. In most cases, the trustee takes agreed upon fees for this task.
Main Differences Between Executor and Trustee
- According to legal terms, an executor is someone who oversees the will of the departed person; while the trustee is an individual or a group of people who administers assets for the benefit of a third party.
- The executor has to be appointed by the local probate court. But, a trustee can be appointed by an individual, court, or by any financial institution.
- An executor has to follow the term of the will and distribute & transfer the belongings of the deceased person to the heirs. On the other hand, the primary duty of the trustee is to follow the term of the trust document and oversee and maintain the asset of the designated trust.
- The executor begins his work after a person passed away to comply with his will. However, the trustee can work for charity, pensions and retirement plans, trust funds, bankruptcy cases, etc.
- The duration of the executor job is short, while the duration of the trustee job can be extended.
- In most cases, the executor does not take fees for this task. On the other hand, the job of the trustee can be non-profit, but most trustee takes agreed upon fees or salary for this task.
Conclusion
Both of these jobs of executor and trustee are quite challenging and require good knowledge of law and accounting principles. The necessary part of this task is to build communication with various government agencies and pay off various due payments. The executor and trustee have to pay all taxes and due payment on time.
This job is required to be handled impartially for fairness. The main objectivity of these jobs is to maintain assets for a certain period before it disbursed to the third party. During this period both trustee and executor remain accountable for the asset. For this reason, it is considered a non-profit work. However, if the trustee or the executor requires managing a large property then they could ask for a fee or salary.
References
- https://heinonline.org/hol-cgi-bin/get_pdf.cgi?handle=hein.journals/oklrv13§ion=34
- https://scholarship.law.marquette.edu/cgi/viewcontent.cgi?referer=https://scholar.google.com/&httpsredir=1&article=2433&context=mulr