A loved one’s passing is felt by their entire surviving family. But when it comes to carrying out the decedent’s final wishes, not everyone has an equal say. Instead, in most cases, only one person—the executor, personal representative, or successor trustee—plays that key role. This role includes gathering the deceased’s accounts and property, determining if any remaining debts are allowable and should be paid, managing the money and property, then eventually distributing the money and property to the individuals or charities named in the will. If you are acting as personal representative or successor trustee of your loved one’s estate or trust, there are some things you need to know.
You are responsible for ensuring that the trust and estate administration goes according to the plan laid out in the governing documents, your loved one’s will or trust. Although you bear that primary responsibility, you need not act alone and can, and often should, involve the assistance of a lawyer, financial advisor, and accountant. Because you bear this primary responsibility, you should carefully consider whether you involve others in meetings with the trusted advisors you engage for assistance. Your dealings with the attorney include the benefit of attorney-client privilege that extends solely to you. The attorney has a legal duty to, and takes direction from, only you. In most instances, it is advisable to attend the initial meetings with the professional advisors alone, not with the beneficiaries of the will or trust. Future meetings could include beneficiaries if you and your team determine that it would be beneficial.
Key Parties in the Will and Trust
Wills and trusts are estate planning tools that allow people to transfer their accounts and property to others when they pass away. It is possible to have both a will and a trust that are part of a larger estate plan. Although wills and trusts are different kinds of documents, they use similar language to identify the key parties involved in asset distribution. Understanding the key parties will help you to better understand everyone’s role in the administration.
- The testator or testatrix is the person who creates a will, spelling out the transfer of assets after their death.
- The trustmaker (also called a settlor, grantor, or trustor) is the person who creates a trust.
- The personal representative (sometimes called an executor) is the person appointed to carry out the instructions of the will. Usually, the testator chooses the personal representative when they create a will. But if a person dies without a will, the state where they lived may choose the personal representative.
- The trustee is the person who administers the trust on behalf of the trustor. In many cases, a trustmaker acts as initial trustee of their trust, and names a successor trustee to act if the trustmaker becomes incapitated and when they pass away.
- A beneficiary is a person (or entity, such as a charity) who receives assets and property from a will or trust.
- An heir is someone entitled to receive a decedent’s property under a state’s default laws if a person dies without a will or trust.
Another important term to understand in the context of will and trust administration is “fiduciary.” A fiduciary is somebody granted legal authority to act in the interests of another. Personal representatives and trustees are fiduciaries. They have been given legal authority by the testator, trustmaker, or the court to carry out the management and distribution of the testator’s or trustmaker’s assets and property. A fiduciary is held to a very high standard of responsibility and is required by law to act in the best interests of all the beneficiaries.
Whom Does the Attorney Represent?
When you, as the personal representative or trustee, hire an attorney to help you with the estate or trust administration, you are the client. The attorney-client relationship extends solely to you; the attorney has a legal duty to, and takes direction from, only you.
If you are also a beneficiary under the will or trust that you are administering, you must keep in mind that although the attorney represents you, it is only in your capacity as the personal representative or trustee. The attorney is there to assist you with the administration, not to handle any issues or advise you on your rights as a beneficiary under the will or trust.
If a family member or beneficiary does attend a meeting with you and the attorney, it should be made clear that the attorney represents only you as the personal representative or trustee and no one else.
Keeping Beneficiaries in the Loop
Wills and trusts can be complex and difficult to understand. Most personal representatives and trustees choose to hire an attorney to help them carry out the terms of these legal documents.
Because personal representatives and trustees owe a fiduciary duty to beneficiaries to communicate with them and keep them reasonably informed about the progress of the administration, it may make sense to invite beneficiaries a meeting with the attorney. This can be especially helpful if the estate or trust administration is very complex. Allowing the attorney to explain firsthand and answer any questions regarding the administration may be easier than remembering everything the attorney said and relaying the information to the beneficiaries.
Attorney meetings are a good setting for open communication, but the attorney–client relationship limits what the attorney can do and say. The attorney will follow instructions from, and is allowed to give legal advice to, only the client. During the meeting, the attorney can answer basic questions from beneficiaries about what to expect during the administration. The attorney can neither give legal advice to, nor act on behalf of, beneficiaries.
Administration of an estate or trust can become contentious when a beneficiary disputes a will or trust or claims that their rights as beneficiary are not being protected. In that case, the beneficiary may choose to hire their own attorney. From that point forward, the beneficiary’s attorney can offer advice, communicate directly with the fiduciary’s attorney, and handle other tasks reserved for the attorney–client relationship.
Setting Up Your First Meeting
If you are currently serving as a personal representative or trustee and need assistance navigating the administration, please give us a call. We are happy to sit down with you and discuss the process and help guide you through the necessary steps.