What is the primary difference between an executor and a trustee?

An executor manages a deceased person's estate through the probate court process, distributing assets according to a will. A trustee manages assets held within a trust, outside of probate, according to the trust document's terms. An executor's role typically ends once the estate is settled, while a trustee's role can last for many years.

Can a trustee also be a beneficiary of the same trust?

Yes, a trustee can also be a beneficiary of the same trust, especially in the case of a grantor acting as their own trustee. However, if the trustee is one of several beneficiaries, they must exercise their fiduciary duty with strict impartiality, avoiding any actions that unfairly favor their own interests over those of other beneficiaries. This can be a source of conflict.

How much does it cost to have a corporate trustee?

Corporate trustee fees typically range from 0.5% to 1.5% of the trust's assets under management (AUM) annually. The exact percentage often decreases as the trust's value increases. Additional fees may apply for extraordinary services, such as managing real estate or complex tax situations.

What happens if a trustee mismanages trust assets?

If a trustee mismanages trust assets, they can be held personally liable for any losses incurred by the trust due to their breach of fiduciary duty. Beneficiaries can petition the court for the trustee's removal and demand an accounting, potentially leading to the trustee having to repay lost funds or damages.

How do I choose a successor trustee?

Choose a successor trustee using the same criteria as an initial trustee: integrity, financial acumen, organizational skills, impartiality, and willingness to serve. It's wise to name multiple successor trustees in order, providing backups in case the primary successor is unable or unwilling to act. Discuss the role with them beforehand.

Are trusts only for the wealthy?

No, trusts are not just for the wealthy. While they are useful for large estates, they offer significant benefits for individuals of all wealth levels, such as avoiding probate, protecting assets for minor children or those with special needs, and maintaining privacy. A simple revocable living trust can be beneficial for many families.

What is the difference between a revocable and an irrevocable trust?

A revocable trust can be changed, amended, or revoked by the grantor during their lifetime. The grantor typically retains control over the assets. An irrevocable trust, once created and funded, generally cannot be changed or revoked by the grantor. Assets placed in an irrevocable trust are typically removed from the grantor's taxable estate and are protected from creditors.

Trustee: Complete Guide to Their Role & Duties | One…