Please share!
  • 6
    Shares
(This page may contain some affiliate links. Please see my disclaimer for more information.)

Last Updated April 4, 2022

What is a trustee in a will? This is a question that many people have. So in this blog post, I will discuss what a trustee in a will is, what their responsibilities are, and what you need to know if you are named as one. Keep reading to find out more!

FREE Budget Binder

What Is A Will?

A will is a legal document that states what happens to your property and possessions after you die. A will is helpful because it designates who will receive your property and makes clear what your wishes are once you pass away.

You can leave gifts that are transferred directly to the beneficiary (a person, charity, or organization that you designate to receive a gift in your will), or you can leave gifts by leaving instructions in your will for a trust to be established.

What Is A Trust?

A trust is a legal arrangement where someone (the trustee) holds real estate, property, or assets for the benefit of another person (the beneficiary). The trustee has a fiduciary duty to manage the trust property in the best interests of the trust beneficiaries.

What Are The Different Types Of Trusts?

There are many different types of trusts, but the two common types include:

Revocable Trusts

Revocable trusts, also referred to as revocable living trusts, can be changed or revoked by the grantor (the person who creates the trust) at any time. These types of trusts allow you to maintain control of your assets during your lifetime.

A revocable trust offers flexibility. This is because the transfer of assets, and the guidelines you’ve specified for the handling of those assets, don’t become permanent until you pass away. 

Also, revocable trusts aren’t subject to probate(which is necessary for wills). Probate is the legal process of administering a deceased person’s estate. That means the assets in the trust go to beneficiaries without having to pass through the probate court.

Photo by SHVETS production

Irrevocable Trusts

Irrevocable trusts cannot be changed or revoked once they are created. So why would someone choose to create an irrevocable trust since they offer less flexibility than a revocable trust? These types of trusts are often used for asset protection or to minimize estate taxes.

An irrevocable trust is not subject to estate tax upon death. That’s because the assets in the trust are no longer considered part of your estate.

Also, an irrevocable trust could be helpful to protect your assets. When assets are transferred to the ownership of an irrevocable trust, it means the trust is protected from creditors, and even legal judgment. 

Daily Goal Planner

Other Special Types Of Trusts

Besides the two common types of trusts, there are also special types of trusts that can be used for specific purposes. Some common examples include:

Living Trusts

A living trust (also known as a revocable living trust) is a type of revocable trust that is created and becomes effective during the grantor’s lifetime. This type of trust allows you to maintain control of your assets during your lifetime.

Testamentary Trusts

A testamentary trust is a type of trust that is created as part of a will and goes into effect after the grantor dies. Once you pass away, the trust becomes irrevocable. This type of trust can be used to provide for beneficiaries who are minors or who are not able to manage their financial affairs.

Photo by Andrea Piacquadio

Why Would You Create A Testamentary Trust In Estate Planning?

There are a few reasons why you might choose to create a testamentary trust. One reason is to provide for beneficiaries who are minor children or who are not able to manage their financial affairs. Another reason is to protect the assets in the trust from creditors or legal judgments.

Where Do You Hold The Trust Assets?

The trust assets can be held in a variety of places, depending on the trust agreement. Some popular options include bank accounts, brokerage accounts, or mutual fund. It is a good idea to work with an attorney to ensure that the assets are held in a way that is consistent with the trust instrument.

What Is A Trustee In A Will?

When you pass away, you may leave gifts for family members by providing instructions in your will for a trust to be established. A trust that is created by your will upon your death is called a testamentary trust.

When you create a trust you must name someone to serve as the trustee. The trustee is responsible for administering the trust for the benefit of the beneficiaries according to the terms of the trust agreement. 

Photo by Sora Shimazaki

Trustees vs. Executors: Is An Executor And A Trustee The Same Thing?

There is often confusion between the role of a trustee and an executor. Generally, the executor of a will is responsible for wrapping up the deceased person’s affairs and distributing what’s left of their estate to the beneficiaries. The trustee, on the other hand, is responsible for managing and distributing trust assets according to the wishes specified in the trust document.

So, no, an executor is not the same as a trustee. An executor is the person appointed by a will to administer the estate of the deceased. A trustee is responsible for administering a trust for the benefit of the beneficiaries according to the terms of the trust agreement.

What Is The Role And Responsibilities Of A Trustee?

There are many different duties that a trustee has, but the most important role of a trustee is to carry out the trust’s directions. Some of the most important responsibilities of a trustee include:

  • Managing the trust property in the best interest of the beneficiaries.
  • Ensuring that trust property is used for its intended purpose.
  • Making decisions about how to invest and use the trust assets if the trust document specifies this.
  • Keeping accurate records of all transactions conducted on behalf of the trust.
  • Providing regular reports to the beneficiaries about the trust’s activities.
Debt Tracker

How to Choose the Right Trustee?

The process of choosing the right trustee can be difficult, but it is important to make sure that you are choosing someone who you can trust and who understands your wishes for your estate.

When choosing a trustee, you should consider the following factors:

  • Are they someone you trust to carry out your wishes?
  • Do they have the time and resources to manage the trust?
  • Do they have the knowledge and experience to handle all of the duties required of a trustee?
  • Are they willing and able to serve in this role?
  • Are they available to take on the responsibilities of a trustee?

The answers to these questions will help you to decide who is the best fit for the role of trustee.

Who Can Be A Trustee In A Will?

A trustee in a will can be anyone you trust who is over the age of 18 and has a sound mind. This includes individuals such as a family member, a friend, your lawyer, your financial advisor, or another personal representative. It is also possible to name a corporate trustee such as financial institutions (such as a bank) or a trust company.

Photo by Matthias Zomer

How Does A Trustee Get Paid?

An appointed trustee is entitled to payment for their work of managing and distributing the trust assets. The trustee’s payment comes from the trust assets. Since the trustee is responsible for managing the trust’s assets and income, they’re in charge of paying themselves for their services.

How Much Does A Trustee Get Paid?

The trustee’s fees should be spelled out in the trust agreement so that there is no confusion about what is expected from the trustee. Although the amount and terms of payment will vary depending on the trust agreement, state laws say a trustee of a trust is entitled to “reasonable compensation.”

The fee can be a set hourly fee or it can be a percentage of the trust’s assets.

What Happens If The Trustee Dies?

If the original trustee dies, resigns, or becomes incapacitated, the trust document will usually specify what happens next. In most cases, the trustee’s duties will be passed to another individual or organization who is named successor trustee in the trust document.

If you are considering creating a testamentary trust as part of your estate plan, please contact an estate planning lawyer for advice. They can help you to create a trust that meets your needs.

Can The Trustee Also Be A Beneficiary?

Yes, the trustee can also be a beneficiary of the trust. This can happen because the creator of the trust may name a trusted family member or friend to both manage their trust and inherit from it. 

However, if the trustee is also a trust beneficiary, they must disclose this information to all of the other beneficiaries. Additionally, the trustee must uphold their fiduciary duties when making decisions about how to administer the trust. They’re still under a legal obligation to take into account the interests of all of the beneficiaries and cannot distributes assets for their own benefit.

Can A Trustee Remove Or Change A Beneficiary From a Trust?

No. Generally, a trustee does not have the power to change or remove the beneficiary of a trust. The right to add and remove beneficiaries is a power reserved for the grantor of the trust. However, when the grantor dies, their trust will usually become irrevocable and cannot be modified in any way.

Even though the trustee may not have the power to change or remove the beneficiary designation, the trust may give the trustee the power to delay — or not make — distributions from the trust. 

For example, the trust might allow the trustee to decide:

  • When to make distributions to a beneficiary;
  • How much property is distributed to a beneficiary; or
  • Whether a beneficiary receives a distribution of trust property at all. 
Photo by fauxels

Trusts like these are sometimes called a discretionary trust. They generally allow the trustee to exercise their discretion in determining which beneficiaries will inherit, when they will inherit, and in what amount each beneficiary’s inheritance will be.

What Is Better, A Will Or A Trust?

There is no one-size-fits-all answer to this question, as the best estate planning option for you will depend on your individual circumstances. A last will and testament is a legal document that dictates how your property is to be distributed after your death. And in general, a trust is a legal document that dictates how your property is to be distributed while you are still alive.

A trust can be a more flexible option than a will and can offer more protection for your assets. A trust can also be helpful if you have minor children or beneficiaries who are not able to manage their financial affairs. However, talk to an estate planning lawyer to get legal advice and find out what option is best for you.

free Resource Library

Summary

In summary, a trustee in a will is someone who is responsible for managing a trust that is created by your will upon your death. They are responsible for overseeing the trust and making sure that it is administered in accordance with the wishes of the grantor (the person who created the trust). They are also responsible for administering the trust for the benefit of the beneficiaries. 

If you need more help, please contact an estate planning lawyer. They can help you to create a trust that meets your needs.

Related Articles:

If you want to remember this article, post it to your favorite Pinterest board.