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Selecting Executors and Trustees for Your Estate

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:

Consider familiarity, conflicts of interest, abilities, burden and cost when selecting between family/friends and a professional.

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
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    Important Disclosures

    This information does not constitute and is not intended to be a substitute for specific individualized legal or estate planning advice. Where specific advice is necessary or appropriate, Schwab recommends consultation with a qualified advisor, CPA, estate planner or attorney.

    The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.

    All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed.

     

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