This is the title of a white paper I provide to all of my clients describing the how, what, when, and where of these fiduciary positions. The need for such a how-to guide became immediately obvious to me in my practice and is based on the first question I am often by those who have been appointed to serve in these roles.
In my experience, most persons named as a Trustee or Executor are not professional fiduciaries. In other words, the role of Trustee or Executor is typically filled by a family member, either a spouse, a child or a trusted friend. As a non-professional, most persons nominated have very little idea of what is expected of them or the liability they take on by agreeing to act as Trustee or Executor.
It is critically important for anyone appointed to understand all of their duties and responsibilities because a failure to carry out each and every duty with 100% accuracy with the terms of the Trust or Will could cause them to be personally liable for any damages caused by their failure. It is my experience that Trustees or Executors who take on these responsibilities with the belief that they are going to be sued by a beneficiary will be more attentive to properly carrying out their duties and will therefore be better able to withstand a charge of a failure to carry out their duties.
Here are just a few things to know about the role of a Trustee of a Trust or an Executor of a Will:
You're a fiduciary. As mentioned, a fiduciary is the person who's liable if they don't do it right, which means that the person named as Trustee of a Trust or Executor of a Will has to follow the wishes of the maker of the document. Any deviation requires approval from all beneficiaries in the case of a Trust or from the Commissioner of Accounts and all the beneficiaries in the case of a Will.
Secure the estate ASAP. Change the locks on the house and collect the keys to any vehicles. Inform heirs and creditors quickly. In the case of a will-based estate plan, the Executor need to create a legal notice to creditors through publication. The creditors of the deceased have a limited time to make a claim, or else they are barred. Don't pay claims until they've been properly authenticated. You can also negotiate claims with creditors—even after you've determined them to be valid—in order to retain more assets for the heirs.
Communicate with the beneficiaries. It's important to reach out to the beneficiaries to keep them in the loop throughout the process, which may take six months or more. Heirs will ask when they get their money or property. They get their distributions when the executor has made the determination that the proper debts have all been paid. However, partial distribution of the estate may satisfy heirs while the estate is being settled, which may include passing out small, tangible items that don't require a separate appraisal. These items can be distributed easily and quickly, but executors first need to make certain there are assets remaining to pay creditors. Document everything concerning the will, which helps with any disputes.
While a fiduciary should be transparent and communicate with the beneficiaries, but it's not a democratic process: you're in charge. If you would like assistance with the administration of a Will or Trust we would be happy to help you with that; give us a call at 757-259-0707 or better yet, request a complimentary consultation online. You will be glad you did.
Reference: US News (June 2, 2016) "4 Tips to Be a Better Executor"