Trustees and Executors are similar in many ways. They are both fiduciaries. A fiduciary is someone who is put in charge of someone else’s money. A Trustee is a fiduciary over a Trust, and an Executor is a fiduciary over a probate estate. Trustees are responsible for administering a trust to the beneficiaries according to a legal agreement, whereas Executors distribute a deceased person’s assets according to a will. Executors must obtain a court order to act on a will.
Trustees are named in Trust documents to act when the original Trustee(s) dies or stops acting. Usually, the person who creates the Trust (the settlor) is also the Trustee to start with. Once the settlor dies or stops acting, the named successor Trustee takes over. Trustees can take over management of the Trust without court intervention. The Trust document provides the procedure, and the successor Trustee usually agrees to act. Once the Trustee agrees to act, then they assume the powers of a Trustee under the Trust documents. It’s just that easy.
Once acting, the Trustee also assumes all of the duties and responsibilities outlined in both the California probate code and the Trust document. Keep in mind that the Trustee is not the same thing as the Trust beneficiary. The Trustee does not receive the Trust assets (unless the Trustee is also named as a beneficiary). And the Trustee does not have the right to change the Trust terms in most cases. Instead, the Trustee must manage the Trust assets according to the Trust documents. Eventually, the Trustee must also distribute the Trust assets as provided in the Trust document.
Executors are people named in a Will to manage the probate estate after a decedent dies. However, unlike a Trustee, an Executor cannot begin acting until they first obtain a court order. When someone dies with a Will, the named Executor must submit the Will to the Probate Court along with a petition asking the court to open “probate.” Probate is just a court process where the management and distribution of a person’s assets are overseen by the court.
By the way, when a person dies without a Will their probate estate can still be opened, but the person appointed to manage the estate is called an Administrator rather than an Executor. It is the same thing, just different titles based on whether there is a Will (Executor) or not (Administrator).
Once the court grants the petition for probate, the court will issue an order and Letters Testamentary. Letters Testamentary is a form document signed by the court clerk that officially appoints the Executor and gives the Executor the power to act over a person’s assets. The Executor can then gather the assets together and take all appropriate actions required to ready the estate for distribution to the named beneficiaries.
Of course, when an Executor is appointed, they, too, take on the duties and responsibilities contained in the California Probate Code for fiduciaries. In this sense, Executors and Trustees are similar. They both manage assets that belong to other beneficiaries, they both are subject to fiduciary duties and obligations, and they both will be paid for their work (assuming they do not breach their duties).
Contact Albertson & Davidson today to learn more and to discuss your unique situation.