The Difference Between a Trustee and Personal Representative

Legal Article

The Difference Between a Trustee and Personal Representative

Whether your estate plan includes only a will or a will and a living trust, it is vital to your estate’s success that you select someone that is responsible for the disposition of your estate. Depending on the jurisdiction, an executor or personal representative will be responsible for the disposition of assets under a will. When dealing with a trust, a trustee is responsible for the disposition of assets.  A relative, close friend, or professional advisors—such as an attorney or accountant—can serve in either of these capacities. Finally, it is often the case that a person will name both an individual and an institution to serve together. Overall, understanding how to select a trustee or personal representative for your trust or will is one of the most important things to consider when planning your estate.

What is a Trustee

As mentioned, a trustee is responsible for the disposition of assets in a trust. This includes overseeing day-to-day management of property and assets within a trust. As the trustor, you can choose anyone to act as your trustee, This includes any person, institution, or a combination of both. In most cases, a trustee serves after your death and has several major responsibilities. These responsibilities include: administering your estate and distributing the assets to your beneficiaries, making certain tax decisions, paying an estates debts or expenses, ensuring all life insurance and retirement plan benefits are received, and filing the necessary tax returns and paying the appropriate federal and state taxes.

What is a Personal Representative

A personal representative is someone that a creator of a will appoints to oversee the administration of the will when all of a benefactors assets have not already been placed into a trust. Unlike a trustee, a court can appoint a personal representative to an estate if someone dies before specifying their own personal representative. Similar to a trustee, a personal representative can be a person, institution, or combination of both. One of the most important things that a personal representative does for an estate after the passing of the benefactor is to provide notice to creditors. This is an administrative duty where the personal representative tells known creditors that the benefactor has died. This is important because once the creditors are notified, they have a certain amount of time to file a claim against an estate to get their money.

For example, after someone dies in Maryland, their personal representative must notify creditors of their death. These institutions have six months to file a claim. After the six month period has passed, the personal representative must use assets in the estate to pay the creditors.

Should I hire a Professional Executor for my Trust or Will

A common question from clients is, “What are the advantages of a professional executor vs. an individual executor?” Typically, a professional executor or personal representative is a specialist in handling estate and trust administration. These professionals will be familiar with local laws and procedures regarding the administration of an estate. In addition, a professional executor or personal representative will not have an emotional bias. It is important that the estate is impartial and thus, capable of acting independently in accordance with the decedent’s instructions. In contrast, the advantages of an individual executor or personal representative are based on their personal relationship with the decedent. An individual executor or personal representative is more likely to be personally familiar with the family and family dynamics. Furthermore, an individual executor is more affordable to their professional counterparts.

Whatever, type of personal representative you chose, it is important that you understand the pros and cons of either option. Often people will select a form of co-personal representatives or co-trustee type arrangement. This type of structure can often benefit an estate by combined expertise and strengths of the individual and institution.

Final Thoughts

Whether you are appointing a trustee or personal representative, you should name a primary representative and a secondary choice. This ensures that your assets will be distributed even if someone is either unable or unwilling to serve your estate. Furthermore, offering a representative a lump sum of money is a good practice to ensure that they complete their tasks.

Finally, make sure the executor, personal representative, or trustee you select does not have a conflict of interest with your estate. For example, selecting a second spouse, children from a prior marriage, or an individual who owns part of your business may result in an unintended conflict of interest between the selected party and the interests of your beneficiaries.

Contact our DC Law Office for More Information

For more information on the difference between a trustee and personal representative, please contact Antonoplos & Associates at 202-803-5676. You can also directly schedule a consultation with one of our attorneys.