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Estate Planning: Distinctions between a Personal Representative and a Trustee

Estate Planning: Distinctions between a Personal Representative and a Trustee

While the Personal Representative (or Executor in some states) of a last will and testament and the Trustee(s) of a revocable living trust and/or other irrevocable trust document are almost always the same person, there are important differences with regard to each of their respective duties in these capacities. The reason the power holders are generally the same for last will and testaments and trusts is because they have similar functions and therefore naming different power holders would make the administration process more complicated and less centralized.

A last will and testament is a legal document directing the disposition of an individual’s assets at their passing. A last will and testament can state the distribution right in the document, or can be utilized as a “pour over” last will and testament to a revocable living trust. Recall in the basis estate planning blog: https://www.capitalplanninglaw.com/basic-estate-planning/, we discussed the differences between the regular “long” last will and testament and the more condensed “pour over” last will and testament, which is executed and/or modified contemporaneously with the revocable living trust.

A revocable living trust can serve the same function as a long last will and testament (distribution of assets), however, it has the significant benefit of probate avoidance (so long as the revocable living trust is funded properly during lifetime). The revocable living trust can also provide for limitations on distributions for young, immature, special needs or spendthrift beneficiaries. See article on the Advantages of the Revocable Living Trust: https://www.capitalplanninglaw.com/advantages-revocable-living-trust. Both the Personal Representative and the Trustee can take a reasonable fee (which may be determined in advance or by state law) for acting on your behalf with regard to your estate and/or revocable living trust.

While many of the duties of a Personal Representative (or Executor) may overlap, there are a few distinct differences between the two roles. For instance, the Personal Representative (or Executor) is responsible for administering your estate through probate, whereas, the revocable living trust is a probate avoidance strategy. The Trustee(s) will not generally handle any probate matters other than cooperating with the Personal Representative (or Executor) for the payment of just debts and taxes of the estate. The next major difference is that a revocable living trust may be used during lifetime and at incapacity for financial support. The last will and testament only springs into action upon a person’s death. The final major difference is that the Personal Representative’s actions (for the most part) must be court supervised throughout the probate process. The Trustee has no such requirement of court supervision because trust assets pass outside of probate.

Contact Capital Planning Law, PLLC for your complimentary consultation to discuss your estate planning, business law, probate, guardianship and/or real estate needs.