The difference between an executor and trustee has to do with the disposition of the decedent’s estate. If the decedent established a trust, then a trustee is the person in charge of overseeing the affairs of the trust. If the decedent left an estate that is valuable enough to go to probate court or the property is not exempt from probate, then the executor is the person in charge of managing the estate during the probate process. The executor has to make payments to the creditors, pay taxes, and distribute the assets per the instructions left in the will. When the decedent dies and no will is found or is invalid, then the executor distributes properties to heirs pursuant to regional laws.
The courts often lack the finances and staff necessary to complete the tasks required to distribute assets that belonged to the decedent. For example, some laws require that an ad be published in the newspaper to alert creditors to the probate proceedings regarding the estate in case they have a claim to bring against the estate or for the purposes of debt settlement. For that reason, an executor is required to handle the affairs of the estate as it relates to transferring the assets during the probate process. The executor is often named in the will; if not, an heir or someone else can petition the court to be granted the right to act as an executor.
A trustee avoids the probate proceedings according to trust law because the trust property is not considered property of the estate when the decedent dies. An executor and trustee both act as managers, but the trustee’s duties and responsibilities often last as long there is a still a trust, which can be for several years. The executor’s duties end as soon as the probate court proceeding ends. Once the trust property has been entirely distributed, the trustee is no longer needed because the trust terminates. Some trusts require more than one trustee, and it’s possible for the trustee to be a corporation or non-profit organization.
Choosing an executor and trustee is an important aspect of estate and probate planning. The named individual or company is legally responsible for how he or it accomplishes duties on behalf of the estate or trust, and the individual or company often purchases insurance for protection in the event of lawsuits brought about by the defendant’s heirs and beneficiaries. It’s usually necessary for individuals to determine the mental and emotional capacity of the executor and trustee they want to nominate to do their assigned duties. There’s a risk that the executor may withdraw from the position, and naming an alternative executor or trustee is one way to guard against that.