What's the difference between a trustee and a personal representative?

If you have a trust, then this is a common question that you may have. You've created a long document with all the provisions for your trust, but you also usually have a will that has a separate role for someone named a "personal representative."

Trustees

If you have a standalone trust, or if you have a testamentary trust built into your will, the trustee is more of an ongoing job. Their job is going to be managing the trust for the beneficiaries and making decisions for how things should be distributed and when to wrap up the trust.

Personal Representative

A personal representative, however, sometimes called an "executor," is somebody who's appointed under your will. Their job is, after you are deceased, to take your will and your death certificate to the local probate court. They file it with the clerk and let them know that you're deceased and they are appointed as the personal representative. Their job then is to do what the will says distribute the assets. If you have a trust, their job is often to then take whatever assets are left that are not in your trust and move them over to your trust.

Can It Be The Same Person?

The common question I get is, can this be the same person? Can my brother be both my trustee and a personal representative? And the simple answer is yes they can. But this is where a professional is important, to make sure that you've got the right provisions in your will and your trust so that there's no issue with somebody serving in both roles.

Who Should Be The Trustee or Personal Representative?

Now a common question I get is, who should I choose to be the trustee? Whether we're dealing with a testamentary trust (one that's going to be set up in your will normally for underage children), or whether we have a standalone trust (a revocable or irrevocable trust), who you should choose is a very personal decision, and it's important you don't take it lightly. The most common people you'll consider are

  • Family members
  • Friends
  • Corporate trustee or a professional 

Now if you're going to go the third route with a corporate trustee or a professional, you should be aware that they normally will charge fees. So all of that money that you're leaving behind, there's going to be a portion of it coming out to the trustee to manage your assets.

Characteristics of a Good Trustee or Personal Representative

Some characteristics you want to look for in a trustee or a personal representative:

  • Is the person responsible? (There's going to be a lot of paperwork. A personal representative is going to be working with the probate court to make sure all the correct documents are filed. Your trustee has that ongoing responsibility to manage the trust to do distributions to wrap up the trust when it's time to shut it down. So there's a lot of different things that they need to be responsible for.)
  • They know your kids and your grandkids (They're being asked to distribute certain assets to your children and you want to make sure they understand your children and their unique needs and when it may be a good idea to distribute things to them and when it may not be.)

If you're dealing with trustees, chances are you've worked with a professional. To set up a trust on your own is a very complicated process. Instead of trying to DIY the process, start off by talking to your financial advisor. See whether a trust or simple will makes the most sense for you. Once you've got that in place, go talk to an attorney and tell them what the person what your financial advisor suggested for you and they can work with you to put together the right documents. Now if you're new to estate planning or it's time to do an update to your estate plan, let's set up a Legal Strategy Session to discuss what the best options are for you. You may have more questions beyond just the difference between a trustee and a personal representative. So we can go through your questions on that call to make sure you can put together a well crafted estate plan.