Who Has More Power: Executor Or Trustee?

When it comes to the question, who has more power: executor or trustee?, the answer depends on the context, but generally, an executor holds broader authority over the overall estate, while a trustee manages specific trust assets. The Executor is responsible for managing the deceased’s estate, which includes paying debts and distributing assets as per the will. On the other hand, a Trustee’s role is more focused on the management and protection of specific trust assets, a role that often extends beyond the initial settlement of the estate.

Are you planning your estate and wondering who should have authority over it? Our team of estate and trust lawyers at Onyx Law Group can help ensure that your assets are protected and that your estate planning goals are achieved. Contact us today to schedule a meeting and to get your estate planning in order.

In this blog, we will compare the powers and responsibilities of an Executor and a Trustee, including their decision-making authority, control over assets, and roles in managing and distributing them.

Who Holds More Authority: Executor Or Trustee?

An Executor oversees the deceased’s estate during the estate administration phase, while a Trustee holds authority over specific assets for a longer, potentially ongoing management period. Each has its own sphere of authority. Both roles require the utmost integrity and carry significant fiduciary duties.

What Do an Executor and a Trustee Do?

The Executor is the person appointed in a Will to wind up the deceased’s assets and administer the estate through the probate court process. In BC, an executor’s duties are regulated by the will, by legislation, and by the probate court’s supervision. Some of the executor’s duties include:

1. Gathering estate assets, such as retirement accounts, and creating a probate estate inventory of assets held by the estate;
2. Applying to the probate court to confirm the executor’s legal authority and allow the executor to access estate assets held by financial institutions;
3. Paying debts, taxes owed, and funeral expenses from the estate assets;
4. Filing tax returns, which include the deceased’s final returns and estate returns, is also required.
5. Finally, the executor should distribute any remaining assets held by the estate after the probate process is completed.

A Trustee, on the other hand, is a person appointed to manage a specific asset. These trusts can arise through the operation of the will or during the life of a testator, such as a revocable living trust. This means a Trustee will have different responsibilities:

1. A trustee holds legal title to trustee-managed trust assets (which can include bank accounts, investment accounts, or real property).
2. The Trustee’s duties are governed by both the trust agreement and legislation.
3. The Trustee manages the investment of assets prudently and maintains accurate records.
4. The trustee is responsible for the distribution of trust assets.
5. The trustee’s work can last for many years.

What Is the Decision-Making Authority of Executors and Trustees?

The nature of the decisions each must make ultimately determines the differentiation between executor and trustee powers. The Executor’s authority focuses on managing assets through the probate estate process. They are empowered to liquidate assets, sell property, and use estate funds to settle all liabilities and pay bills. Often, to start the probate process, they must apply to the probate court to gain the full legal authority to administer certain probate assets.

The Trustee’s authority, on the other hand, focuses on asset management and, based on the trust agreement, distributing trust assets. They have a significant say in how these assets are invested and managed and may even have discretion over the timing and amount of distributions of income or capital to the multiple beneficiaries, if permitted by the trust document.

The legal limitations on trustees are found in the trust document and among their strict legal duties, such as their fiduciary duty to act solely in the best interest of the beneficiaries. Neither can act to benefit themselves.

What happens if the executor of an estate and the trustee don’t agree? Ultimately, numerous factors come into play, so it’s advisable to seek legal guidance from an experienced estate planning attorney if you find yourself in such a situation.

However, in general, if the asset forms part of the estate and is to be liquidated or distributed to the beneficiary, the executor will have the final say. If the asset is, for instance, a revocable living trust, the trustee has the final authority, though these disputes are always subject to review by the court. If you are facing a dispute, we can offer support, especially if you need to challenge the executor.

Can an Executor Also Be a Trustee?

In the vast majority of estate planning situations, the answer is yes. The same person is often named as both an executor and a trustee. This circumstance often happens when Wills include a testamentary trust for minor children.

When one individual holds dual responsibilities, their role simply evolves depending on the situation. Take the above situation as an example. Initially, the person’s role will concentrate on the estate administration tasks that come with being an executor. This would include gathering the deceased’s assets, paying debts, and dealing with the probate process.

After this is done, their job will change to that of an initial trustee who is in charge of managing assets. They will transfer the assets designated for the trust from the estate to themselves in their new capacity as the appointed trustee. At this point, the administration role ends, and the trust administration role begins.

What Is the Impact of Holding Both the Roles of Executor and Trustee?

Holding both the executor and trustee roles can streamline estate settlement and administration, resulting in increased efficiency, as a single individual guides the process from beginning to end.

However, a unified role does not always make sense, as it can introduce potential conflicts of interest, for instance, if the executor/trustee is also a designated beneficiary of the estate. Because of this, some individuals choose a neutral party to act as a trustee or as an executor, such as a corporate trustee or professional estate planning attorney. To avoid personal liability for mistakes, it may be wise to appoint different individuals to each role.

What Are the Legal Considerations When Serving as Executor vs a Trustee?

There are distinct legal responsibilities for a person serving as an executor vs. a trustee. Both, however, are regulated by legislation and certain common law duties. Both are held to a high standard of care and loyalty, which is referred to as fiduciary duties. They must maintain full transparency and accurate and detailed records throughout the entire process.

In the end, the differences in legal responsibilities are clearer when you look at what each person does: the executor’s job ends when the remaining assets are given out and is usually short-term, while the trustee’s job of managing things can go on for many years. As you finalize your estate planning, it’s crucial to consider these distinctions in assigning roles.

What if an Executor Declines the Role?

Serving as an Executor is voluntary. If a named executor declines the role, they must formally renounce their appointment, normally by doing so in writing.

The implications of a resignation for estate administration are obvious. The estate requires an executor to be appointed! That is why the Will generally names an alternate executor (or successor trustee) who can step in. If no alternate is named or if the alternate is unable to act, the individual with the highest legal priority can apply to the court to be the estate’s Administrator.

Are There Alternative Solutions if an Executor Steps Down?

If an executor steps down, there are a few alternative solutions available to ensure the estate is administered efficiently. The most common option is to have the alternate named in the Will to take over as executor. If no alternate is available, any individual who is a beneficiary or otherwise interested in the estate may apply to assume the executor’s responsibilities.

In BC, if no suitable person is found or is willing to act, the Public Guardian and Trustee of British Columbia could take on the role of administrator or trustee. The probate court’s priority in naming a person to this role is always the best interest of the estate and its beneficiaries.

What Common Mistakes Do Executors Make?

The most common mistakes by executors stem from a lack of succession planning within the will. For instance:

• Not Naming an Alternate Executor: Failing to name alternate executors and successor trustees can cause delays in the probate process.
• Assuming Acceptance by an Executor: Not discussing the role and the scope of the legal responsibility and legal arrangement with the named individual beforehand. Even if the individuals are close family members, establishing a trust is a critical step.
• Inadequate Legal Guidance: This scenario might be where the executor attempts to administer the estate without the support of an estate planning attorney, tax advisor, or financial advisor, which can lead to errors in filing tax returns or even improper distribution.

These oversights can create significant legal and financial headaches for family members and beneficiaries, increasing the risk of personal liability for executors.

To avoid these issues, a comprehensive estate plan can ensure that your estate planning documents are clear and comprehensive and that you have discussed the role of executor ahead of time.

Do Beneficiaries Influence Executors or Trustees More?

While beneficiaries have a right to information and to hold executors and trustees accountable, the level of beneficiary influence varies depending on the role and circumstance. For instance, if all beneficiaries agree in writing, it is possible to distribute an estate early. The Will or trust document’s terms and the facts of each case will determine the level of influence.

What Are the Influence Dynamics of Executors and Trustees?

The legal obligation to act in the beneficiaries’ best interests governs the responsibilities of both the executor and the trustee, much like the fiduciary duties held by someone with a power of attorney. As it concerns executors, they have a clear mandate to gather assets, pay debts, and distribute them according to the will and in the beneficiaries’ best interests. Thus, the terms of the Will and the law will limit beneficiary influence on these core tasks. However, if the executor delays or acts improperly, beneficiaries have the right to seek a court order or file for estate litigation.

As it concerns Trustees, particularly in trusts with discretionary powers, there will be more room for influence on decisions from beneficiaries. For example, if the trust allows the trustee to decide how much income a beneficiary receives, the trustee must balance the wishes of the beneficiary against their legal duty to the entire trust. Thus, here the conflict potential is higher, and family dynamics must be carefully managed.

Conflict Resolution

Conflict between beneficiaries and an executor or trustee is unfortunately common. Prevention is always the best strategy. Careful and precise estate planning documents are the best way to accomplish this procedure.

If conflict nevertheless arises, mediation is a beneficial way to resolve it before pursuing formal estate litigation. In mediation, a neutral third party can help bridge the gap in understanding and prevent the need for litigation.

However, if a beneficiary believes the executor or trustee fails their fiduciary duties through delay, poor investment of trust assets, decisions, or self-dealing (acting for their benefit), and mediation is improper, they can apply to the court to have the individual removed. We are experienced in conflict management and estate litigation and can provide the necessary legal guidance.

Do You Want to Understand Executor vs. Trustee Authority?

When comparing who has more power, an executor or a trustee, it ultimately depends on the context, as each role holds authority over different aspects of an estate. While the executor’s power ends once the estate is settled, a trustee’s authority can continue for years, meaning each role carries significant but distinct responsibilities within estate planning.

Choosing your executor and trustee wisely is one of the most important estate planning decisions. To make the right choice, you need to ensure that the individuals you select have the integrity and financial acumen to manage the deceased’s assets and uphold their fiduciary duties. It is always a beneficial idea to make these decisions on the basis of sound legal advice from an experienced local estate planning attorney.

At Onyx Law Group, we help clients understand the powers and responsibilities of executors and trustees. Our experienced estate lawyers provide clear guidance on managing estates, trusts, and potential disputes. We guarantee a comprehensive understanding of your rights and obligations under BC law. Contact us today for expert advice and personalized legal support.

Frequently Asked Questions

Understanding the differences between an Executor and a Trustee can be confusing, especially when it comes to authority and responsibilities. This FAQ section answers the most common questions about who has more power, what each role entails, and how their duties impact the management and distribution of an estate.

What Are the Differences Between an Executor and a Trustee?

An Executor administers the deceased’s entire estate and ensures that all debts are paid and taxes are handled. A Trustee administers only the trust assets and does so for a specific, often long-term purpose.

Can an Executor Also Be a Trustee in the Same Estate?

Yes, it is very common and legally permissible for the same person to serve as both an executor and an appointed trustee.

What Is the Difference Between a Power of Attorney, Executor, and Trustee?

A Power of Attorney grants authority to someone to manage your financial and legal affairs while you are alive. An Executor manages your estate after you die. A Trustee manages trust assets for beneficiaries, which can be created during your lifetime (for instance, an inter vivos trust) or upon your death (a testamentary trust).

Who Has More Power, an Executor or a Trustee?

The Executor has authority over all the deceased person’s assets for the duration of the probate process. The Trustee has more specialized power for ongoing management over only the trust assets, which can last for years or decades. As a result, their powers are different in focus.