Choosing the Right Executor or Trustee for Your Estate Plan
Creating an estate plan – whether it’s a will, a revocable living trust – is a fundamental step toward securing your family’s future and peace of mind. But, the documents themselves are only part of the equation. Before you can create a will or revocable living trust, you must choose the right people to carry out your wishes. In Colorado, we call the person executing your Will a Personal Representative (synonymous with Executor in other states), and for a revocable living trust, we call them a Trustee.
A Personal Representative and a Trustee are not merely titles. The individuals you choose to fill these roles will hold significant legal and financial responsibilities, acting as fiduciaries to manage and distribute your assets according to your instructions. Selecting the right person (or institution) is crucial for ensuring your legacy is handled correctly, smoothly and exactly as you intend, minimizing stress for your loved ones and providing peace of mind to you.
At The Law Office of Kevin R. Hancock, we emphasize the profound importance of choosing the right decision makers in your estate planning.
Understanding the Roles: Executor vs. Trustee
While both roles involve managing assets and following your directives, they operate within different legal frameworks:
- Personal Representative: A Personal Representative is appointed by you in your Last Will and Testament (a/k/a Will), but they have no formal authority to act unless and/or until a Court appoints them in probate. A Personal Representative’s primary duty is to manage your estate through the probate process after your death, including identifying assets, paying debts and taxes, and distributing remaining assets to your heirs as specified in your Will.
Trustee: If you create a revocable living trust, you will typically be appointing yourself as the Trustee to manage your own assets during your lifetime. You will also need to designate a successor Trustee who steps in upon your incapacity or death. The successor Trustee’s role is to manage the assets held within the trust, distribute them according to the trust’s terms, and manage the trust for beneficiaries, all outside of probate court. Their authority begins immediately upon your incapacity or death, as specified in the trust document.
Key Qualities to Look for When Choosing
Selecting an Executor or Trustee requires careful consideration of several characteristics:
- Trustworthiness and Integrity: This is paramount because they will have access to all your financial information and control your assets during incapacity and when you pass. Choose someone you trust implicitly.
- Responsibility and Organization: These roles require meticulous record-keeping, adherence to legal timelines, and careful management of funds. The individual should be detail-oriented and capable of handling administrative tasks.
- Financial Acumen: While they don’t need to be a financial expert, they should have a basic understanding of financial matters, be able to work with advisors (like attorneys and accountants), and manage a budget.
- Availability and Willingness: The role can be time-consuming. Ensure the person you choose is willing to take on the responsibility and has the time to dedicate to it. Discuss it with them beforehand!
- Emotional Stability (during a difficult time): They will be managing your estate during a period of grief for your family. Choose someone who can remain calm, objective, and level-headed.
- Geographic Proximity (Optional but helpful): While not strictly necessary, having an Executor or Trustee who lives relatively close can sometimes simplify practical matters.
No Conflicts of Interest: Avoid naming someone who stands to gain disproportionately from your estate in a way that could conflict with their fiduciary duties to all beneficiaries.
Who Should You Consider – And Who to Avoid?
- Family Members: Often, family members and/or friends are the first choice as Personal Representative or Trustee, but you must consider whether they possess the necessary qualities. A family member might be trusted, but are they organized? Can they handle potentially volatile family dynamics without bias?
- Professional Fiduciaries/Corporate Trustee: For complex estates, significant assets, or if you do not have a suitable family member, a professional fiduciary or a corporate trustee (i.e. a bank, investment company with a trust department, etc.) may serve as an impartial, experienced Trustee. But, you should be aware most corporate trustees will not act as personal representatives. While they charge fees, their expertise can be invaluable.
- People to Avoid: Individuals with a history of financial mismanagement, substance abuse, severe health issues, or those prone to family disputes. Also, avoid naming someone without discussing it with them first!
The Importance of Successor Appointments
While you are not required to name a second/successor Personal Representative or Trustee to the first one you name, we always recommend naming at least two just in case your first choice predeceases you, becomes incapacitated, or simply declines the role. Having backup(s) ensures your plan will be executed and maintains your peace of mind.
Don’t Make This Decision Alone
Choosing your Executor or Trustee is one of the most critical decisions in your estate plan because it impacts how smoothly your wishes are carried out and how much stress your loved ones will face. The attorneys at The Law Office of Kevin R. Hancock can help you evaluate potential candidates, understand the full scope of responsibilities for each role under Colorado law, and ensure your choices are clearly documented in your will and/or trust. We’re here to provide the insights you need to make the best decisions for your legacy and your peace of mind.
Ensure your estate plan is in the right hands. Contact The Law Office of Kevin Hancock today for a consultation to discuss your Executor and Trustee choices.