I am often asked what the difference is between an Executor, a Trustee, a Guardian. I’m going to do my best to provide an easy-to-understand explanation of each of these important roles.
The Executor is the person who literally executes your will. This means that anything needing to be filed with the court is filed. All the distributions are directed to the correct beneficiaries. In the event one or more beneficiary is a trust, then this will involve working with the designated Trustee to establish the trust. In more complex situations, it is recommended that the Executor work with an attorney who focuses on estate administration and probate.
If there are any trusts created by your will, then you will likely need to designate a Trustee. This is a person or institution who is responsible for managing the assets of the trust, and making sure all distributions are made in accordance with the terms set forth in the trust. When selecting an individual, I often recommend choosing someone who is financially savvy.
There are different opinions on whether it is better to have an individual or an institution to serve as Trustee. I generally recommend selecting an individual. If that person is not comfortable managing the money, they always have the option to hire a money manager or financial planner to assist them. However, when it comes to discretionary distributions, I find the personal relationship maintained with an individual Trustee is more beneficial.
The Guardian is the person you are selecting to raise your children. Your children will be living with this person (or people), and become a part of their family. I find that selection of the Guardian is often the most difficult decision in the estate planning process, especially for people who do not have close family members upon whom they can rely.
I am often asked if the Guardian and Trustee can be the same person. The answer is yes. However, you may not want the same person taking on both roles. You may select someone for Guardian whose values you share, and who you believe who do the best job of taking care of your children, but this person may not make the best financial decisions. In that case, having a different person as Trustee will serve to protect the assets.
These three roles are all very different responsibilities, but each one is important when planning. Take your time, discuss your options with your spouse, and ask your estate planner to assist. While it is important to have a will, you should never designate people to take on any of these roles unless you are confident that is the person you want in that position.