One of the essential decisions in estate and life planning is the selection of the individuals who will serve as the Executor, Trustees, Guardians or Agents. In making those decisions, it is important to review the duties and responsibilities of each of these roles.
An executor is a person who is named under your will to handle the administration of your estate. The Executor is appointed by the Surrogate of the County in which you die and serves in a fiduciary capacity until the Estate is completed and closed. The Executor will do the following:
- Collect the estate assets.
- Liquidate and/or sell assets.
- Pay the debts and expenses of the estate, including medical, personal and funeral expenses.
- File state and federal income tax returns for the estate.
- File state and federal estate or inheritance tax returns if required.
- Hire real estate brokers, financial advisors, lawyers and accounts.
- Prepare an accounting of all assets and expenses of the estate.
- Distribute the remaining assets to named beneficiaries or trust, if needed.
A Trustee is a person who is named under a Trust (either in your will or created while you are alive). The Trustee also serves in a fiduciary capacity and will administer the trust funds for each beneficiary until the trust terminates. The Trustee will do the following:
- Collect the assets from the Executor.
- Make decisions as to the distributions of income and principal of the Trust or follow the trust instructions.
- Handle the investment and management of assets.
- Hire professionals such as financial advisors, attorneys and accountants.
- File tax returns and pay taxes.
The Attorney in Fact/Agent
An Attorney in Fact under Power of Attorney will “step in your shoes” and handle your finances in the event you are ill or disabled. Anything you can do, the Agent will be able to do unless you limit the Agent’s power.
An Agent under the medical or health care directive will be your “voice” to the physicians, hospitals and medical facilities as to the type of medical care and treatment you desire in the event that you are unable to voice that decision.
A guardian is a person who is named under your will or by the court to handle the person and property of a minor or disabled person. In the case of a guardian of children, if you should die when your children are under age 18, then the Guardian will serve as his or her pseudo parent until the child reaches the age of majority. As guardian, the person named will be able to make all medical, financial, religious and educational decisions for your child. The guardian is also a fiduciary.
Things to Think About in Making Your Selections
In making the selection of these individuals, keep in mind some general concepts:
- Select an individual who you trust.
- Select an individual who you believe has the abilities needed to fulfill the role.
For example: Your sister may be a great mother but not able to balance her checkbook and manage money. Solution: select sister as guardian but not trustee of the trust.
- If the person will handle funds, select someone who has financial knowledge.
- Having a different person controlling your children’s funds may be beneficial. It not only lessens the financial responsibilities of the guardian but also keeps the guardian “honest” since he or she must account for the use of the funds to the trustee.
- The Guardian should be someone who shares similar morals and religious beliefs as you and who you feel will raise your children as you intended.
- The Trustee and Guardian should be able to get along if they are different people.
- Make sure your Agent under any medical directive feels comfortable making these types of decisions.
- Discuss with your designated individual his or her willingness to serve in the selected role.
The information presented in this article is not legal advice and does not create an attorney-client relationship with Bourne, Noll & Kenyon.