Trustee vs. Executor: Should It Be the Same Person?
Your executor and successor trustee can usually be the same person, and it's actually a quite common arrangement. But whether they should be the same individual can depend on several factors. It helps to understand the roles of the executor and the successor trustee in your estate plan as you make a decision because some of the factors can be personal.
The Role of Your Executor
The individual you name in your will as executor of your estate is responsible for guiding your estate through the probate process. This involves working under court supervision to a great extent.
The executor will gather and identify your assets and do the same with your debts and liabilities. They'll alert your creditors as to how they can make claims to your estate for payment, and they might have to liquidate some of your assets to pay those debts.
The executor will report everything they've done to the probate court judge and receive permission to distribute your remaining estate to the beneficiaries you've named in your will. They might need court approval to take other steps through the probate process as well, such as liquidating property.
The Role of Your Successor Trustee
Your successor trustee will take over management of your revocable living trust should you die or become incapacitated to the point where you can no longer manage it yourself. Until then, their only job is to wait in the wings until you need them. Barring complications, your successor trustee will perform the job without any court intervention.
A revocable trust is one that you retain control over, acting as the primary trustee during your lifetime. You can move assets in and out of your trust, change your beneficiaries, or even revoke your trust entirely if you decide you no longer need it or want it.
But someone has to take over this role if you can no longer manage your own affairs. Your successor trustee will step in to run the trust for you if you become incapacitated, and will distribute the assets contained in your trust to your named beneficiaries after your death. In most cases, your successor trustee will then shut the trust down.
Assets held in a revocable living trust don't require probate to move to a living beneficiary.
Advantages of Naming the Same Person
Naming the same person as the executor of your estate and the successor trustee of your trust will minimize expenses.
The attorney helping to settle the estate and the trust will only have one person to work with when addressing any complicated issues that may come up. Your estate is responsible for paying the attorney, so the less work they have to do, the more money remains for your beneficiaries.
Naming the same individual also streamlines the probate process. It eliminates the need for communication and the potential for misunderstandings between two people because one person is handling the whole process.
Disadvantages of Naming the Same Person
You might want to name a different executor and successor trustee to provide checks and balances when it comes to settling your estate and trust. No one single person would have unilateral control over everything. Many actions would require cooperation between the two of them.
Consider naming one child or relative as your executor and two children or relatives as successor co-trustees to avoid beneficiary feuds and promote family harmony.
Of course, having multiple people involved can bog down settlement of your estate if they don't get along or have diametrically opposed ideas about actions that should be taken.
The Effect of State Laws
Naming the same person as your executor and your successor trustee might present complications depending on the laws of your state. For example, your executor must be related to you by blood or marriage to legally serve if you live in or own real estate in Florida. You can name anyone you like to serve as your successor trustee, however.
So your best friend who lives in New York can't serve as your executor, but can serve as your successor trustee.
Some other states have similar rules. Consult with an estate planning attorney to find out if yours is one of them.
It Might Not Matter
Your estate will avoid probate in most cases if your revocable living trust is completely funded because you've transferred all your property and assets into its ownership. Nothing needs to be probated to transfer to a living beneficiary, and this eliminates the need for an executor.
It's recommended that individuals who form trusts should also create "pour over" wills, however. This type of will collects assets that were unintentionally left out of the trust and transfers them into the trust after death. But even in this case, the executor's only job would be to deal with transferring these few assets.
Otherwise, there would be nothing to probate and your trust would control your bequests to heirs and friends.