You should open an investment account with a bank, trust or brokerage firm in the name of the estate or trust. All spending and withdrawals must be made from these accounts, and you should receive regular bank statements. An executor signs: “Alice Carroll, executor (or personal representative) of the estate of Lewis Carroll, deceased.” A trustee signs: “Alice Carroll, trustee” Some trustees have the discretion to distribute or withhold the distribution of trust funds to a beneficiary. This discretion is often granted to protect trust funds from the beneficiary`s creditors or simply to ensure that the funds are available for specific purposes until the beneficiary reaches a certain age. The trustee of such a discretionary trust should understand the objectives of the trust and the legitimate needs of the beneficiary. Your will, or “will” for short, names your personal representative, also called an executor. A will also names the beneficiaries or who will receive your property after you leave. A guardian for young children can also be named in a will. The tutor and the personal representative can be different people.
The person you trust to manage your finances and submit the right documents may be different from the person you trust when caring for your children. It is very important to read and understand the will or trust so that you know who the beneficiaries are, what they are supposed to receive when and who your co-trustees are. Does the will give everything directly or create new trusts that can last several years? Does a trust require certain distributions (“Any income earned each year is payable to my wife Nancy”) or does it leave it to the discretion of the trustee (“My trustee distributes the income she deems necessary for the education and maintenance of my son Alan until he turns 25”)? The document often gives important instructions to the trustee, such as what assets to use to pay taxes and expenses. The document usually lists the powers of the trustee in detail. Most trustees hire a trust and estate lawyer to assist them in the proper performance of their duties. The advice of a lawyer is very helpful in making sure you understand what the will or trust and the applicable state law offer. For example, at an initial meeting, it is common for the lawyer to review many of the most important provisions of the will or trust (or both) step by step so that you understand your role. Please note that if you agree to be appointed executor or trustee, you are responsible for understanding and implementing the terms of the trust or will.
Your ability to choose who will manage your affairs after your death is one of the benefits of a will or trust. When you create a will or revocable trust as a substitute for a will, designate someone to manage your estate. When you create a trust, you appoint someone as the trustee of the trust. The trustee is required to follow the instructions in the trust deed and the trust act. Each bank, trust or investment company may have its own format, but you can generally use “Alice Carroll, trustee, Lewis Carroll Trust dated January 19, 1998” or, in a nutshell, “Alice Carroll, trustee as agreed on January 19, 1998” for a trust. For an estate, you must use “Alice Carroll, executor, estate of Lewis Carroll, deceased”. It is the trustee`s responsibility to determine when invoices that were not paid at death and expenses incurred in administering the estate must be paid, and then pay them or inform creditors of a temporary delay. In some cases, the estate can be damaged if certain bills, such as damage insurance bills or property taxes, are not paid on time. Most States require written notice to all known or reasonably identifiable creditors. While most bills are not a problem, it is advisable to consult a lawyer in unusual circumstances, as the trustee may be held personally liable if they do not properly spend estate or trust assets or properly protect estate assets, such as maintaining adequate insurance coverage. NOTE: State and local laws change frequently, and the above information may not reflect the latest changes. Please consult a lawyer for up-to-date legal advice.
The information in this article does not constitute legal advice and is not a substitute for legal advice. The probate court appoints a personal successor. In the case of a retired trustee, the trust agreement often provides for the appointment of a successor. As a last resort, a court will make the appointment. Whether you appoint a trustee or a personal representative, you should appoint a primary representative and a secondary representative. This ensures that your assets are distributed even if someone can`t or won`t service your estate. In addition, it is good practice to offer a lump sum to a representative to ensure that they are carrying out their duties. Just as a personal representative must be accountable for the administration of your estate, a trustee must make an annual declaration of the trust. A trustee who is an individual must have strong accounting skills or should hire a professional to perform this task. Even professional trustees, such as trust companies, receive complaints from a beneficiary from time to time.
The best way to deal with them is to do your best to avoid them in the first place by following the guidelines outlined in this FAQ and consulting with an experienced estate administration lawyer. Many complaints arise because beneficiaries are not kept informed about the administration of the trust or estate. Frequent communication with beneficiaries is essential. The best approach in all cases is to be proactive by communicating throughout the estate or escrow administration process and handling all issues with the appropriate formality. If a complaint is not limited to routine matters, consult a fiduciary and probate lawyer. When planning for income tax, it is important to note that the estate or trust and its beneficiaries may not fall into the same income tax brackets. Thus, the timing of certain distributions can save money for everyone involved. Caution is also required because trusts and estates are subject to different rules, which can be very complex and can reach the highest tax rates at very low incomes. Some tax preparers and accountants specialize in preparing such fiduciary tax returns and can be very helpful. They are familiar with filing times, can determine if the estate or trust must pay quarterly estimated taxes, and can help you plan distributions or other measures to reduce tax costs. A personal representative is also a person with the power to make decisions about others. For example, the person who is authorized to make health-related decisions for another person because they are very ill or unclear is a personal representative.
In this case, a personal representative has a power of attorney, a legal document that allows the representative to act for the other person in legal or financial decisions. The person you appoint to manage your estate is your “personal representative,” sometimes called your “executor.” Your personal representative and trustee are both “trustees.” For example, after a person`s death in Maryland, their personal representative must notify creditors of their death. These institutions have six months to apply. At the end of the six-month period, the personal representative must use the assets of the estate to pay creditors. In a previous article, I explained the term “fiduciary” estate planning. In this post, I explain the term “personal representative,” also known as executor, in the context of Crown planning. If an estate plan includes a revocable living trust, a legal entity formed to hold ownership of an individual`s assets, or another type of trust, those affected need to understand the fundamental differences between these two roles. Both types of “trustees” have a responsibility to act in the best interests of the estate and its beneficiaries, but each plays a very different role in an estate plan. Appointment procedure: Personal representative signs a simple affidavit (private) or state approval process by probate (public) A personal representative typically performs a number of tasks when acting as executor of a deceased person`s estate, including arranging funeral services, notifying those entitled to a portion of the estate`s assets, and determining the value of the estate. minus debts.
A personal representative usually takes care of the administration and security of estate assets, takes care of the payment of all debts and expenses owed by the deceased and the estate, and assesses the income taxes and inheritance tax payable. Finally, a personal representative files all necessary tax returns in a timely manner and distributes estate assets in accordance with the will. Some wills contain “testamentary trusts” that are funded after your death. In these wills, one or more trustees are appointed in addition to a personal representative. The personal representative and trustee named in these wills are sometimes the same person.