As we work with clients to draft their estate planning documents we will name various trusted individuals (or professional entities) to serve as the fiduciaries for their legal documents. Depending on the document, the named fiduciary will have different titles that are specific to that type of document.
Do You Need Both an Executor and a Trustee?
In a will you will nominate someone to serve as executor. In a trust you will name someone to serve as trustee and successor trustee.
What’s the difference?
In your will you will nominate someone to serve as the executor of your estate. Upon your death, if you have assets that pass through your will to your beneficiaries, the executor will be responsible to make those distributions. The executor is also responsible to pay any legally enforceable debts of the estate and to file all the necessary paperwork with the local Circuit Court. In Virginia, the courts use a local attorney that has been appointed by the court to oversee this process. This attorney is referred to as the Commissioner of Accounts.
With respect to naming a fiduciary in a will, it is important to understand that you can only “nominate” someone to serve as your executor. Ultimately, an individual can only serve as executor if they are qualified by the local Circuit Court. It is important to nominate someone who will meet the criteria of the local court and is capable of fulfilling the responsibilities that come along with that role.
In contrast to an executor, a trustee is someone you name in a trust to conduct the business of the trust. If you don’t have a trust (or aren’t creating one in your will) then you won’t need to have a trustee. Trustees fulfill a similar role as executors. They will pay legally enforceable debts of the decedent (individual who died) and will make distributions to the beneficiaries named in the trust. Additionally, with particular types of trusts, your trustee will also be able to pay bills for you if you become incapacitated. Unlike an executor, the trustee does not have to qualify before the court to serve in that role. In fact, trustees will generally never have to interact with the legal system.
Can the Same Person Be My Executor and Trustee?
If you have both a will and a Revocable Living Trust (estate planning trust), the individual or entity serving as executor and trustee could be the same. In fact, as a general rule, it is more efficient to have the same person in those two roles. At JGB, when we create an estate planning trust for our clients, we will also create a special kind of will to work with the trust. The type of will we use for this purpose is referred to as a “Pour-Over Will.”
A pour-over will captures any assets that aren’t connected to your trust and sends those assets back to the trust for distribution. When the same individual is serving as both executor and trustee this process is virtually seamless.
Careful and expert drafting of these documents will provide you and your family with peace of mind that your estate won’t create a costly and difficult burden on them. At JGB, we can provide you with our insight on how to determine who should serve in the various roles in your estate plan.
This process is not “one size fits all.” Your plan and who you choose to serve in the roles of Executor and Trustee require careful attention and professional insight. We know how to create the documents, but you understand the dynamics of your family. By working together, we can create an estate plan that is tailored to your particular needs.
Protecting the Interests of Our Adult Children
In addition to making good choices about who will serve as the fiduciaries for your documents, it is also important to think about who will be able to act on behalf of your adult children if they are hospitalized or become incapacitated. Unfortunately, if they don’t have their own documents in place, the only way someone will be able to act on their behalf is by filing a petition in court to become their fiduciary. This process is arduous and expensive! The better approach is to have professionally drafted documents to authorize someone to make legal, financial and medical decisions on their behalf if they aren’t able to do so themselves.
At JGB we don’t want our clients or their children forced into the court system to get this kind of protection. We offer a “college pack” that will address all of these issues and give you and your adult children the peace of mind that comes with professionally drafted legal documents. Please call us to set up an appointment for this affordable option that will protect you and your loved ones from unnecessary hardship!