Choosing the person who will manage your living trust or estate is one of the most important decisions you will make when creating an estate plan. Your successor trustee or executor should be responsible, organized, trustworthy, and capable of handling significant financial and legal responsibilities.
The right choice may be a family member, trusted friend, professional fiduciary, or corporate trustee, such as a bank or trust company. The best person for the role is not necessarily your oldest child, closest relative, or the person who expects to be selected. Your decision should be based primarily on who can perform the required duties carefully, impartially, and consistently.
What Is the Difference Between a Trustee and an Executor?
A trustee and an executor both serve in positions of trust, but they manage different parts of an estate plan.
A successor trustee manages the assets held in your living trust when you can no longer serve as trustee, whether because of incapacity or death. The trustee must follow the terms of the trust, protect trust property, keep accurate records, communicate with beneficiaries, address taxes and expenses, and distribute assets according to your instructions.
An executor is the person named in your will to manage assets that must pass through probate. The executor may be responsible for filing court documents, locating and protecting estate property, notifying creditors, paying valid debts, filing tax returns, and distributing the remaining property under the terms of the will.
Learn more about what an executor does during the California probate process.
What Qualities Should a Trustee or Executor Have?
The person you select does not need to be a legal or financial expert. However, the individual should have the judgment, temperament, and organizational ability necessary to manage the role and obtain professional assistance when needed.
Important qualities to consider include:
- Responsibility: The person should reliably complete important tasks, meet deadlines, and follow through on commitments.
- Organization: Trustees and executors may need to manage financial statements, tax records, legal documents, property, correspondence, and beneficiary requests.
- Trustworthiness: The person will have access to sensitive financial information and may control substantial assets belonging to the trust or estate.
- Financial judgment: Although professional advisors can provide assistance, the fiduciary should be comfortable reviewing accounts, making financial decisions, and maintaining accurate records.
- Impartiality: The person should be able to follow your instructions and treat beneficiaries fairly, even when personal relationships or emotions are involved.
- Communication skills: A trustee or executor may need to communicate with beneficiaries, attorneys, accountants, financial institutions, creditors, and other interested parties.
- Availability: The person should have enough time and flexibility to manage responsibilities that may continue for months or longer.
- Willingness to seek help: A responsible fiduciary should recognize when legal, accounting, tax, investment, or real estate guidance is necessary.
Both trustees and executors are fiduciaries. This means they are expected to act in the interests of the trust, estate, and beneficiaries rather than using their authority for personal advantage. Read more about the duties of a fiduciary in California.
Should You Choose a Family Member or Friend?
Many people choose a spouse, adult child, sibling, or close friend to act as trustee or executor. A person who knows your family and understands your wishes may bring valuable personal knowledge to the role.
However, closeness alone does not make someone the best choice. Before naming a family member or friend, consider whether that person:
- Handles their own finances responsibly
- Can remain calm under pressure
- Communicates effectively with other family members
- Can make difficult decisions without being controlled by emotion
- Lives close enough to manage property and other practical matters
- Has the time and willingness to accept the responsibility
- Can remain neutral if disagreements arise among beneficiaries
Choosing one child simply because that child is the oldest—or naming all children together to avoid hurt feelings—can create complications. Co-trustees may disagree about investments, distributions, property sales, expenses, or communications with beneficiaries. These disagreements can delay administration and intensify existing family tensions.
The firm’s discussion of common mistakes when choosing a successor trustee explains why ability, compatibility, and sound judgment should carry more weight than birth order or emotion.
When Should You Consider a Professional or Corporate Trustee?
A professional fiduciary or corporate trustee may be appropriate when an estate is especially complex, substantial assets must be managed over an extended period, or family conflict could make it difficult for a relative or friend to act impartially.
A professional may also be worth considering when:
- No family member is willing or qualified to serve
- Beneficiaries have a history of conflict
- The trust contains a business, investment property, or complex financial assets
- Distributions will continue for many years
- A beneficiary has special needs, addiction concerns, or difficulty managing money
- The trust requires ongoing financial judgment and detailed recordkeeping
- You want an independent party to reduce accusations of favoritism
A professional fiduciary or corporate trustee will generally charge for its services. However, the experience, continuity, administrative support, and neutrality provided may justify that cost in the right circumstances.
Should You Name More Than One Trustee or Executor?
Naming co-trustees or co-executors may appear to provide checks and balances, but requiring two people to make every decision can also cause delays and disagreements. The individuals may have different communication styles, financial philosophies, or opinions about what your instructions mean.
When considering co-fiduciaries, ask whether the people you are naming can work together, communicate openly, and resolve disagreements without placing the trust or estate at risk.
In many situations, naming one person to serve and another as the alternate may be more practical than requiring multiple people to act together. Your estate planning attorney can help you evaluate whether one fiduciary, co-fiduciaries, or a combination of family and professional assistance is appropriate.
Why Should You Name Backup Trustees and Executors?
Your first choice may be unable or unwilling to serve when the time comes. The person could experience health problems, move away, develop a conflict with a beneficiary, or decide that the responsibility is more than they can manage.
Naming one or more alternates helps prevent uncertainty and reduces the possibility that a court will need to become involved in selecting a replacement.
Your estate plan should clearly state who will serve if your initial trustee or executor cannot act. It may also provide an orderly process for appointing additional successors when none of the people originally named remain available.
Should You Discuss the Appointment in Advance?
Before finalizing your documents, consider speaking with the person you intend to nominate. Explain why you selected them, what the role may involve, and where your estate planning documents and important financial information will be kept.
The conversation gives the person an opportunity to ask questions and tell you whether they are comfortable accepting the responsibility. It can also reduce the risk of your chosen fiduciary declining to serve during a family emergency or after your death.
When Should You Reconsider Your Choice?
Selecting a trustee or executor should not be treated as a one-time decision. Relationships, health, finances, family circumstances, and the complexity of your assets may change over time.
You should review your choice after events such as:
- A marriage, divorce, birth, or death in the family
- A significant change in the health of your chosen fiduciary
- A move to another state or country
- A serious disagreement between the fiduciary and a beneficiary
- A substantial increase or change in your assets
- The purchase or sale of a business or real estate
- Changes in a beneficiary’s health, finances, or personal circumstances
- Your chosen fiduciary expressing reluctance to serve
An outdated appointment can undermine an otherwise carefully prepared estate plan. Periodic reviews allow you to confirm that the people named in your documents remain appropriate for their roles.
What Mistakes Should a Successor Trustee Avoid?
Choosing the right person is only the first step. Once a successor trustee begins serving, that individual must understand the trust’s instructions and the responsibilities involved in administering it.
Failing to communicate with beneficiaries, mixing personal and trust funds, maintaining incomplete records, making premature distributions, or overlooking tax and legal requirements may expose a trustee to disputes or personal liability.
Download the firm’s free report, The 10 Biggest Mistakes Trustees Make and How to Avoid Them, for additional information about the responsibilities that may arise during trust administration.
Get Help Selecting the Right Person for Your Estate Plan
The person you choose as trustee or executor may eventually be responsible for protecting your property, carrying out your instructions, communicating with your loved ones, and resolving difficult financial or family issues. That decision deserves careful consideration.
The experienced Southern California estate planning attorneys at Kavesh, Minor & Otis can help you evaluate potential trustees and executors, identify possible complications, and create an estate plan that clearly defines each person’s authority and responsibilities.
To learn more about creating or updating your estate plan, contact Kavesh, Minor & Otis or call 1-800-756-5596 to determine whether you qualify for a free consultation.
