Estate planning is sometimes viewed as an exercise in document creation. You simply express your wishes in writing and that’s the end of the story.
It is certainly important to create a will or a trust to serve as the centerpiece of your estate plan with regard to leaving behind instructions. At the same time, you should be well aware of the estate administration tasks that must be completed after you are gone to bring your wishes to fruition.
The Role of the Executor
If you use a will as your primary asset transfer vehicle, you would name an executor in the document to act as the estate administrator. The executor would not be able to act independently after you are gone. Your will would be admitted to probate, and the court would provide supervision.
The executor would be charged with the responsibility of notifying creditors about your passing, and final debts would be paid, including taxes. The executor would identify and inventory the assets that comprise your estate, and appraisals and liquidations may be necessary.
Since probate is a legal proceeding, a probate lawyer will often be engaged to help the executor during the process, depending on the extent of the assets and the acumen of the executor — legal guidance can be very helpful.
Speaking of the executor’s capabilities, it is important to name someone that has the time to available to administer the estate. It should also be an individual that is capable of handling complex financial and procedural matters.
Potential conflicts of interest can enter the picture as well, and longevity would be a factor to consider. This may be stating the obvious, but you have to make sure that the person that you want to name as executor is willing to assume the role.
Getting back to the probate timeline, after all details have been attended to by the estate administrator, the court will close the estate. At that point, the executor would be empowered to distribute assets to the heirs in accordance with the instructions that were left behind in the last will.
Living Trust Trustee
Before we explain the role of the living trust trustee, we should provide some clarity about trusts in general. There are irrevocable trusts that satisfy more advanced estate planning aims, and there is also the revocable living trust. The latter variety is most commonly utilized so we will focus on that here, and we will look at irrevocable trusts in future blog posts.
If you establish this type of trust, you are called the grantor. While you are living, you can serve as the trustee, and you can also act as the beneficiary and receive distributions from assets that are held by the trust. Because of this arrangement, you maintain complete control on every level.
The ultimate objective is to facilitate asset transfers to your loved ones after your death so you name a successor trustee to assume the role when the time comes, and you name your heirs as successor beneficiaries. In the trust declaration, you leave instructions to the trustee regarding how you want the assets to be distributed.
After your passing, the trustee would step in to act as the estate administrator. The probate court would not be involved, and this is a major advantage because probate is often time-consuming and costly. Plus, when you have all of your assets conveyed into a living trust, the inventory process is largely complete from the outset.
You can name someone that you know to act as the trustee of your living trust, but once again, it is a big job that requires significant financial acumen. As an alternative, you could engage a professional fiduciary such as a trust company or the trust section of a bank.
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