When mapping out your estate plan, choosing your beneficiaries is often a straightforward decision. Selecting someone to carry out your wishes, on the other hand, is rarely as clear—and can mean the difference between preventing and provoking conflicts among family members.
“Once you’ve signed the estate-planning documents, you’ve effectively pushed the first domino,” says Tanya Simpson, a Schwab wealth strategist and tax, trust and estate specialist based in Phoenix. “Choosing the right executor and trustee can help ensure the rest of the pieces fall into place.”
While it’s common for a family member or friend to serve as the executor of a will or the trustee of a trust, there are times when it makes sense to appoint a lawyer, trust company or other professional. Here are important factors to consider:
Rather than approach the decision as an either/or, Tanya says, consider appointing a family member or friend and a professional co-executor or co-trustee. “The professional can handle the heavier lifting, and yet you still have someone familiar with the family to handle the more sensitive issues,” she says. “In addition, since you’re not relying solely on a professional, it’s potentially much less expensive.”
Executor vs. trustee: What’s the difference?
Executors and trustees perform similar functions, though one major distinction is the time commitment that may be required. An executor holds the role only until he or she distributes the deceased’s assets, while a trustee is committed for the duration of the trust, which can span years, if not generations. More specifically:
An executor carries out the deceased’s final wishes and settles any outstanding financial obligations. Responsibilities typically include:
- Filing the will with the local probate court and, if necessary, representing the estate in probate proceedings
- Managing assets until they can be distributed to beneficiaries
- Distributing assets and disposing of any remaining property
A trustee manages the assets of a trust. Often, the trust’s creator will act as the trustee for as long as he or she is able, after which a successor steps in. Responsibilities typically include:
- Investing trust assets prudently
- Recordkeeping and reporting
- Distributing assets according to the terms of the trust
