An executor is the person who will help execute the plan you laid out in your last will and testament. A trustee is responsible for managing a trust on behalf of its beneficiaries.
Is a trustee the same as the owner of a trust? The trustee of a trust is not considered the legal owner of the trust's assets in the traditional sense. Instead, the trustee holds legal title to the trust property, but they do so for the benefit of the trust beneficiaries, who hold equitable title.
A trustee typically has the most control in running their trust. They are granted authority by their grantor to oversee and distribute assets according to terms set out in their trust document, while beneficiaries merely reap its benefits without overseeing its operations themselves.
A trustee has all the powers listed in the trust document, unless they conflict with California law or unless a court order says otherwise. The trustee must collect, preserve and protect the trust assets.
An executor does not possess the power to overrule or change the terms established by a trust; these roles carry separate responsibilities. An executor's role consists of overseeing and closing an estate as per its will's instructions without disrupting or interfering with their independent functions as trustee.
While trustees may temporarily be able to delay trust distributions if a valid reason exists for them doing so, they are rarely entitled to hold trust assets indefinitely or refuse beneficiaries the gifts they were left through the trust.
A trustee can end up having to pay taxes out of their own personal funds if they fail to take action on behalf of the estate in a timely way. Of course, they can also face criminal liability for such crimes as taking money out of a trust to pay for their own kids' college tuition. Yup, that's stealing.
Trustees are personally liable for all decisions they take in that capacity, and their liability is not automatically limited to the value of the trust fund. Typically, the trust deed will limit trustees' liability in some way and these clauses should be checked, as well as any existing trustee insurance.
A trustee must abide by the trust document and the California Probate Code. They are prohibited from using trust assets for personal gain and must act in the best interest of the beneficiaries. Trust assets are meant for the benefit of the trust beneficiaries and not for the personal use of the trustee.
The trustee must act solely in the interest of the beneficiaries, avoiding conflicts of interest and self-dealing. Any breach of this duty can result in personal liability.
A Trustee owes a duty of honesty, integrity, loyalty and good faith to the beneficiaries of the trust. A trustee must at all times act exclusively in the best interests of the trust and be actively involved in any decisions.
A trustee is often designated by the original owner of the assets, called the trustor. In some cases, a trustee may be assigned by a court. A trustee may be appointed for various purposes, such as in the case of bankruptcy, for a charity, or for a trust fund.
Some wills contain “testamentary trusts” to be funded after your death. Such wills name one or more trustees in addition to a personal representative. The personal representative and the trustee named in such wills are sometimes the same person.
As a trustee, you are responsible for managing trust property for another person or organisation, as outlined by the terms of the trust. Trust property includes money, shares and real estate. A testamentary trust is a trust established under a valid Will.
There are five general duties of the Trustee – to be prudent, to carry out the terms of the Trust, to be loyal to the Trust, to give the Trust their personal attention and to account to the beneficiaries of the Trust. The Trustee must act reasonably and competently in all matters of the Trust.
Serving as the trustee of a trust instills a person with significant power. They have access to all the trust assets, but with a catch: They can only use those assets to carry out the instructions of the trust.
Being a trustee is also a role that can be quite time consuming, more so than most people assume. Depending on the nature of the estate, being a trustee can require quite a few hours, which can be hard to come by if the trustee also has a full-time job, a family, and/or other obligations.
Anyone 16 and over (18 for an Unincorporated Association or Charitable Trust) who is not 'disqualified' can be a Trustee. The reasons for disqualification were set down by the Charities Act 2011, and were designed to prevent people convicted of financial crimes, or who made serious financial errors, becoming trustees.
The California probate code outlines the responsibilities of trustees in managing and fairly distributing assets to beneficiaries. Typically, a revocable trust with clear provisions for outright distribution might conclude within 12 to 18 months.
Experience and Knowledge. Another key consideration is whether the individual or entity is qualified to act as trustee. If the trust has substantial assets, an individual with experience managing significant assets or with a background in finance or investments may be better suited to the role of trustee.
It is not unusual for the successor trustee of a trust to also be a beneficiary of the same trust. This is because settlors often name trusted family members or friends to both manage their trust and inherit from it.
Fiduciary Duty to Beneficiaries
The trustee must always put the beneficiaries' interests ahead of their own and avoid conflicts of interest. If a trustee withdraws money for personal reasons or uses trust assets inappropriately, they can be held personally liable for any losses to the trust.
Under California law, embezzling trust funds or property valued at $950 or less is a misdemeanor offense and is punishable by up to 6 months in county jail. If a trustee embezzles more than $950 from the trust, they can be charged with felony embezzlement, which carries a sentence of up to 3 years in jail.
When they pass away, a successor trustee takes control of your trust. Furthermore, let's assume that you were also the trustee of a revocable trust. In this case, the successor trustee will take over the duties of the trustee, thus taking your place in terms of trust management.