So, What's in a Title?  What You Need to Know About

Selecting the Right Executor, Guardian, and Trustee.

In estate planning, there are many players and many roles to be filled.  Just as a Tony award-winning stage production has a lead role, a director, and many people working behind the scenes, you will be both the star and director of your estate plan but will have to cast many other parts.  In order to make those calls, you should understand the differences between the roles, the similarities in the roles, and how to pick the right actor.  And, much like the live show, any mistakes or miscues could become part of the historical record.  So, making the right choices is very important, because you want performers who are up to the task, who will follow the script as written, and who will remember whose show it really is.  But how do you cast these roles, and what are they? 


The Executor

In a will, the executor is the person who 'executes,' or carries out, the provisions of the will.  He has several distinct duties under his role.  First, he must secure and protect the estate's assets (your assets).  That may mean changing the locks on doors to keep people away for a while and to protect the estate.  He must also pay claims against the estate such as taxes and past bills, and represent the estate in case of claims or disputes. By law, the executor is a necessary person for handling an estate’s business until the estate is closed. Consequently, if you don’t effectively name an executor, including a backup (successor) executor, then the Court will have to appoint one for you to carry out the plan. That can cost money from the estate and delay closing of the estate, and could even impact how the distributions will be carried out.


An executor has legal duties (called fiduciary duties) to the estate, the estate’s creditors, and the estate’s beneficiaries. An executor is usually entitled to collect a fee from the estate provided she handles the estate assets according to the law.  Therefore, selecting the right executor requires some thought, but frequently a close family member is chosen.


In deciding who to appoint as executor, you should consider many factors:  the age, maturity, residence and geographic proximity, experience, financial respon-sibility,  and trustworthiness of the person, the likelihood that the person will die before you, and any other regular obligations that person may have.  Once you decide on your first choice as an executor, you should do it all over again for a successor executor, just in case the first is unable or unwilling to serve.

The Guardian

If you have minor children, you should seriously consider what would happen to them if you (and their other parent) dies.  While children are not possessions, parents typically consider their children their most valuable and precious charges. If the other parent predeceases you, if both of you die in a common accident, or if the surviving parent is unable or unfit to care for the minor child, then the Court needs to know who to look for to fill that enormous role in caring for and supervising the child. If there is a surviving minor child but a guardian is not named, the Court has the unfortunate obligation to make its own decision, and try to be informed by the testimony of a few surviving friends and relatives. Sometimes, and despite being well-intentioned, the Court’s decision runs afoul of what you would have wanted, and the minor child(ren) are placed in a home and circumstances contrary to what you would have chosen, had you just written it down in your estate plan.

Consequently, naming the guardian for any minor children can be more important than naming who will get the property. The guardian should be someone you know very well, who you've seen interacting with children (especially your children), and someone whose parenting style and beliefs parallel your own. Because the guardian will be getting the most important and precious charge, and because the guardian can alter the course of the child’s life, sober reflection and consideration is warranted. Frequently, people choose guardians other than the immediate family members that a Court might have chosen, because the decision is very private and made considering the way the child should be raised, not the family in which he will be raised. And just as with the executor, there should be a back-up or successor guardian. If a couple is named as the guardian(s) of a minor child, you'll need to designate a successor guardian in case of divorce of the couple, or the death of one or both guardians.

The Trustee

Additionally, you may want some assets held for a period of time until a certain event happens or until the intended beneficiary (such as your child) reaches a certain age. There are a variety of reasons to hold assets ‘in trust,’ but it is usually done to ensure that the beneficiary, if a minor or young adult, reaches at least a chronological age of maturity where he is less likely to squander the bequest. Because those assets need to be protected until the beneficiary reaches that age, they are held ‘in trust’ by a person called the trustee. The trustee is in charge of the affairs of the trust, and the property held in trust belongs to the trust (not to the estate). The trustee has power to make decisions about investments, distributions, use of professional advisors, and when to finally close the trust. And, like the executor, the trustee has fiduciary duties and responsibilities to the beneficiaries.

Consequently, choosing a qualified trustee for any trust created is very important. Occasionally, people  name institutions to manage a trust created under their will, but this can be expensive and impersonal unless the trust is large.  More frequently, people choose family members or close friends who are familiar with both the testator and the trust beneficiary. The trustee, as the name implies, should be trustworthy with the assets held in trust. They must be able to keep those trust assets separate from their own assets, and protect/preserve them for the intended beneficiaries. In making the appointment, you must recognize that temptation, and appoint a prudent, responsible and ethical person as trustee. As with the executor, the trustee should be someone expected to survive you long enough to carry out the provisions of the trust. Finally, when you've reached the decision on who to appoint, you should go through the selection process again for the successor trustee, just in case the first trustee is unwilling or unable to serve.


Conclusion


As you can see, selecting the people that will be your executor, guardian and trustee are essential steps in creating your estate plan, and require careful consideration and deliberation for each of those roles.  Just like the director in that Tony award-winning production, you will have to understand and cast many parts.  Mistakes or miscues could be very costly or even jeopardize your plans.  Making the right choices is very important. 

Disclaimer:  Prior results do not guarantee future outcomes.  The information you obtain at this site is informational only and is not, nor is it intended to be, legal advice. You should consult an attorney for advice regarding your individual situation. We invite you to contact us and welcome your calls, letters and electronic mail.  Contacting us does not create an attorney-client relationship. Please do not send any confidential information to us until such time as an attorney-client relationship has been established.

So Why Do You Need To Do Anything?  


You may think that, because you don't have children, aren't married, or don't have many possessions/much money, that you don't need a Will.  Reaching this decision without competent legal advice is imprudent, and your circumstances may change.  Furthermore, you may not be fully aware of, or have fully received, all the things that could pass through your Will. 


Furthermore, if you die without a Will, your probate assets will have to be distributed according to the laws of 'intestacy.'  If you die without a valid Will, you're deemed 'intestate,' and each state has statutes governing how the intestate person's assets shall be distributed.  Those rules may conflict with your own ideas and wishes, so it's better to have an effective plan in place. 


Even if you have a Will in place, you should revisit that Will and your entire estate plan with every major life event, or at least every ten years.  Life events such as marriage, divorce, birth or adoption of a child, death of a relative, your own disability or that of a close relative, starting a business, retirement or promotion in career, relocation, and even advancing age are all examples of events which should prompt review of estate plans.   


Like a well-charged set of batteries in a flashlight, an effective estate plan is there to help you and your family weather the storm of your passing.  You may not need it today or tomorrow, but knowing where it is, how it works, and that it will work right when the time comes and it's actually needed, can provide comfort and peace of mind.  Call us and consult with an experienced attorney about securing your own peace of mind.       




What Is the Difference Between a Will and a Trust? 
A Will (or  Last Will and Testament) is a legal declaration by which a person, the testator, names one or more persons to manage his or her estate and provides for the distribution of his or her property at death. Wills generally only apply to property in your probate estate; that is, property you own in your own name that doesn't pass by operation of some other law or contract. 


For example, plans or policies that have named beneficiaries are usually non-probate assets.  That is because, when you die, the terms of the document control what happens to the assets it covers.  Also, there are types of joint-tenancy and joint ownership of assets that may make property non-probate. 


It is important not to confuse the probate estate with the taxable estate.  These are distinctly different things, and have different legal consequences. 


Most importantly, all states have rules on what will pass as a "Will," and what won't.  To be a valid Will in New York, certain formalities must be satisfied and certain criteria met.  Just writing a list of your property and naming who it will go to just isn't enough.    


A trust is a relationship in which property (including the bundle of rights which go with it)  is held by one party for the benefit of another. A trust is created by a settlor or grantor, who transfers property to a trustee. The trustee then holds that property for the trust's beneficiaries.  A trust can be revocable, or irrevocable.  A grantor can also be named as trustee in certain situations, but in others the trustee must be someone other than the grantor. 

When the grantor places property into trust and turns over part of his or her bundle of rights to the trustee, he separates the property's legal ownership and control from its equitable ownership and benefits. There are many reasons to do this, but frequently it is done through a Will.  Testamentary trusts created in a Will can set forth how money and property will be handled for children or other beneficiaries.


Both of these documents, Wills and Trusts, are legal documents and creations which have significant legal consequences and must be fully understood before executing.  Furthermore, both have specific rules and laws governing their creation, execution, and provisions.   Consulting with a experienced and qualified attorney is very important if you are considering either or both of these.    

Plan Now For Later