Trustee vs Executor
In California, there are differences between the roles of an executor and a trustee. An executor is responsible for carrying out the terms of a will and distributing the deceased person’s assets according to the will. The court appoints an executor when a will is admitted into probate. On the other hand, a trustee is responsible for managing the assets in a trust and distributing them to the beneficiaries according to the terms of the trust. A trustee is named in the trust document and does not usually need to go to court. Here are some key differences between an executor and a trustee in California:
An executor in California is a person who is responsible for carrying out the terms of a will and distributing the assets of the deceased person according to the will. The court appoints the executor when a will is admitted into probate.
If there is no will, the court appoints an “administrator” who performs the same function, usually a relative. Once appointed by the court, the executor assumes the powers and fiduciary duties necessary to comply with the will’s terms and the state’s legal requirements. The executor makes sure all debts are paid, all taxes paid, and all assets cared for, then distributes the remaining assets to the beneficiaries following the will. An executor is a fiduciary and is legally required to follow the terms of the will and make distributions to the beneficiaries per the terms. The executor must adhere to the terms of the will in conformity with California law, which imposes a fiduciary duty upon the person so appointed.
An executor has many responsibilities, some of which can be costly if mishandled. They must identify and notify all creditors and beneficiaries, manage the assets, and do so within applicable, very rigid deadline periods. Executors must be 18 years old and of sound mind. In-state and out-of-state executors are both allowed. California requires an executor bond, also known as a probate bond or fiduciary bond, to ensure that executors live up to their financial responsibilities. Executors can receive payment for the work they put into gathering, liquidating, transferring property, and paying creditor claims. However, they must only pay themselves with a court order. Executors must obtain letters of testamentary to be empowered to act on behalf of the estate.
Some of the obligations of an executor include the following:
- Carries out the terms of the will
- Must follow probate procedures with probate court oversight
- Appointed by the court when a will is admitted into probate
- Only in charge of overseeing the assets that are part of the probate estate
- The role is limited if most of the decedent’s assets were held in the trust before they died
In California, a trustee is a person who is responsible for holding and managing property for the benefit of the trust’s beneficiaries. Trustees are bound by rules called fiduciary duties, which require them to administer trusts with reasonable care, skill, and conduct to the same degree that a reasonably prudent person would effectuate the trust’s terms. They must remain impartial when dealing with beneficiaries and ensure their actions align with the best interests of all beneficiaries. Trustees must follow the trust language and execute the terms of the trust, which is one of the most fundamental responsibilities of any trustee.
A trustee must act impartially in investing and managing the trust property, considering any differing interests of the beneficiaries. Trustees are entitled to compensation because being a trustee is an essential legal title. This title carries a lot of personal and professional liabilities. They must keep track of income and expenses, distribute funds to beneficiaries, and file tax returns. Beneficiaries can take legal action and enforce their rights under the trust if a trustee breaches their fiduciary duties. The failure to perform duties and obligations can create a risk of personal liability for the trustee. Therefore, California trustees can retain legal counsel to assist and advise them in carrying out the trust terms.
Some of the obligations of a trustee include the following:
- Manages the assets in a trust
- Carries out the terms of the trust
- Does not usually need to go to court
- Named in the trust document
- Holds the legal title to any assets that are placed in the trust
- Can make distributions to the beneficiaries without seeking court approval
- They must follow the terms of the trust but have greater authority to use their discretion in administering the trust without seeking the court’s approval before making distributions.
It is important to note that both executors and trustees are fiduciaries. That means they are legally required to follow the terms of the will or trust. And make distributions to the beneficiaries following the terms.
Is your trustee breaching their fiduciary duties?
Further, if you would still like more information on Trust Litigation and removing a Trustee, check out our complete Overview of California Trust Litigation, available on our website. And if you have more questions about your rights as a Beneficiary and what you should know moving forward.
Need More Information on the Roles and Duties of a Trustee in California?
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