Written By:  A. Suzanne Robertson, CFP®

My post on 6/30/2023 (here) discussed the importance of having a will and how a well-written trust can supplement your will to help protect and extend your legacy to future generations.  The success of your arrangements will largely depend on the individual(s) you appoint to carry out your wishes.  Towards that end, in today’s blog we’ll explore the importance of selecting the correct executor and/or trustee and the qualities to look for in these individuals.

Your executor and trustee each play a central role in administering your estate and trust.  The same person can serve in both capacities. While they don’t need to be the same person, you will want to ensure these individuals can work well together to execute the objectives of your estate plan.  

Integrity and honesty are non-negotiable qualities for both executors and trustees. These individuals will have access to sensitive financial information, and you need to have absolute confidence in their ethical conduct. Both your executor and your trustee will have fiduciary responsibilities to your beneficiaries, and it is imperative that they understand those responsibilities.  

Your executor will need to gather and secure your assets including personal belongings, bank accounts, investments, real estate, cars, and any other property not titled to a trust.  During this process, they will need to prepare a comprehensive inventory of all assets and liabilities.  Some assets may require a professional appraisal to determine an accurate market value.  Once gathered, safeguarding these assets is essential to protect your estate from potential loss or theft.  We’ve all heard horror stories about distant family members or even strangers walking into a deceased person’s home and helping themselves to valuables.  Your executor will be the first person in line to protect your beneficiaries from that happening.  Clearly, this task will be much more complicated should your executor live on the other side of the country.  This is why I generally recommend clients appoint an executor who is local.  

Should your estate need to go through probate, it will be your executor’s responsibility to oversee the legal process. This will require validating the will and distributing assets in accordance with its instructions, filing appropriate paperwork, appearing in court, and communicating with beneficiaries and legal professionals.  Presuming you owe money at the time of your death it will be your executor’s responsibility to notify your creditors of your passing and settle your outstanding obligations using estate funds.  All the duties listed above should influence your choice toward an executor who has some financial acumen and a track record of responsible money management. 

Your trustee will need to administer your trust in accordance with its terms and any applicable laws. This includes managing the trust assets and investing them prudently while distributing income and principal to beneficiaries as specified in the trust document.  If your trustee is also a beneficiary of the trust, they will need to have a plan to address potential conflicts of interest that will arise during the administration of the trust.  In all cases, your trustee will need to maintain impartiality, as well as open and transparent communication with all beneficiaries.  

With all of this responsibility, acting as executor and/or trustee comes with potential liabilities as well.  Beneficiaries can accuse executors or trustees of mismanaging assets or breach of fiduciary responsibility.  Either of these accusations can result in costly legal actions and personal liability. To help mitigate this risk, your executor and trustee both will need to keep comprehensive and accurate records of all transactions and they will need to keep beneficiaries informed regarding the estate or trust’s status, financial performance, and any decisions that may affect them.  It is for this reason, I recommend that, in addition to being ethical and financially astute, both your executor and trustee should have organizational skills along with the time and commitment to properly attend to their duties.

During times of grief and loss, emotions can run high among beneficiaries. Executors and trustees will need to demonstrate sensitivity and empathy while fulfilling their duties, ensuring a smooth and respectful process.

Additionally, to ensure your estate and trust will be well-managed in the event circumstances change, you will want to name successor trustees and contingent executors in case your initial choices are unable or unwilling to fulfill their roles. They will need to have the same qualities and skill sets as your initial appointees. 

Selecting the right executor for your will and trustee for your trust is a critical decision that will impact the successful execution of your estate plan and the preservation of your legacy. Carefully consider individuals who possess the integrity, financial acumen, communication skills, and empathy necessary to handle these responsibilities effectively. Consulting with an experienced estate planning attorney can provide valuable insights and guidance in making these essential decisions and protecting your estate for the benefit of your loved ones.

Say What?

After approval of a new “wealth tax” in Massachusetts last year, Grant Williams declined to re-sign with the Boston Celtics. Instead he’ll be playing next season in Dallas where he won’t be subject to Massachusetts’ “millionaire tax.” He said his decision to sign a $54 million deal with Dallas over a $48 million offer with Boston had a larger gap than it might seem. “In Boston, it’s $48 million with the millionaire’s tax, so $54 million in Dallas is really like $58 million in Boston,” Williams said. Texas has no state income tax, allowing Williams to keep more of his earnings (although professional athletes also owe taxes in states where they play road games). 

This week in history

1949 – The NBA was born with the merger of the Basketball Association of America and the National Basketball League

1961 – The first Six Flags park opened in Texas. 

1973 – American Graffiti was released in theaters. 

1975 – Labor leader Jimmy Hoffa was reported missing. 

1981 – MTV went on air for the first time with the words, “Ladies and gentlemen, rock and roll.”

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