Every day, we get questions about estate planning. Here are some frequent ones:
1. What’s the difference between an executor and a trustee?
Both are personal representatives. An executor is to a will what a trustee is to a trust. The executor, who is nominated in a will and approved by the Probate Court, administers the assets of a decedent, under Court supervision. The trustee, nominated by the Grantor in a Trust Agreement, administers the Trust assets, both during the Grantor’s lifetime and after the Grantor’s death, without court supervision.
2. What’s the difference between a Grantor and a Trustor or Settlor?
The terms are synonymous.
3. What is the role of a Trustee, after the death of the Grantor?
The Trustee will:
A. Identify, evaluate, take custody of and protect the Trust assets, e.g. locate the Trust Agreement and other valuable documents, examine the Grantor’s mail, find insurance data and evidence of financial accounts, and secure the Grantor’s car, residence, business and other assets.
B. Engage attorney, CPA, insurance agent, financial professionals and others to provide professional advice and assistance.
C. Cancel unnecessary subscriptions and services.
D. Notify beneficiaries and heirs; provide them with copies of documents reflecting their interest in the Trust assets.
E. Arrange to sign on financial and other accounts.
F. Pay those bills which become due.
G. Authorize preparation of tax returns and arrange for the payment of all state and federal income taxes and any estate taxes.
H. Liquidate assets, as necessary, to provide cash flow and facilitate distribution.
I. Prepare an accounting, including assets on hand at the beginning of the Trust administration, income and disbursements, and assets on hand at the end of the accounting period.
J. Distribute the net Trust estate to the beneficiaries, as the Trust Agreement requires.
4. Who needs a living trust?
Typically, if a decedent’s assets, in his/her name alone, have an aggregate gross value of over $100,000, those assets will be subject to probate, a court procedure which takes eight months to a year or longer, costs thousands of dollars, and is a matter of public record. The proper use of a living trust may avoid the time and expense of probate and facilitate early transfer of the decedent’s assets to the decedent’s chosen beneficiaries.
Jerry Kessler practices law in Santa Clarita. You may contact him at 661-255-1001 for a confidential consultation.