You will see the terms Executor, Guardian and Trustee used in a Last Will & Testament, but what do they mean?
What is an Executor?
The Executor (male) and Executrix (female) is the person you appoint to settle your estate. In other words, they are the ones who make sure they gather and account for all your assets and liabilities, pay your final expenses, file any tax returns that are required, apply for any tax waivers and ultimately distribute your estate according to your wishes as set forth in the will. This is a somewhat temporary job since the Executor's responsibilities end as soon as the final distributions are made. Of course, the Executor must account for all the assets, income and expenditures and obtain Refunding Bonds and Releases from each of the beneficiaries.
What is a Guardian?
The Guardian is only necessary if you have minor children (under the age of 18). The Guardian is the person you name to take custody of your minor children if both parents are deceased. Obviously, you want to appoint someone who will agree to take your kids and who shares your values and parenting philosophy. Of course, no one can replace you, but you want to get close. The role of the Guardian ends once the minor children turn 18. Guardians are compensated according to New Jersey law and they are also entitled to receive reimbursement for expenses they incur raising the children.
What is a Trustee?
A Trustee is someone who oversees and manages assets on behalf of another person. Typically in a will with young children, you will be asked to name a Trustee to manage the assets that are set aside for your minor children (or grandchildren in case a child of yours predeceases you). The Trustee is obligated to make distributions that are in the child's best interest and necessary for their health, education and welfare. So, things like tuition, unreimbursed medical expenses and basic housing and transportation costs are appropriate expenditures; whereas, buying a $100,000 red Ferrari is not! Unlike the Guardian, the role of the Trustee can extend beyond the age of 18. Most parents set an outright distribution age of 25. The Trustee should be someone who understands how to manage money, but more importantly, it should be someone who you believe can exercise good judgment when there are requests for money.
Tip One: You can certainly name the same person to serve in all three roles, but if you do that, there is little accountability. If you want more accountability, you should name different people to serve in these roles so that there is accountability between the three.
Tip Two: If you want a couple to serve as Guardian (for instance your sister and her husband), name only your sister rather than your sister and your brother-in-law since it is possible your sister and brother-in-law may not be together when they are needed, and it will not be clear which person you wanted to name.
Also keep in mind that wills are made to be looked at and evaluated every couple of years as your circumstances change. So, it's a good idea to just go ahead and have wills drawn (if you have been putting that off) and commit to revisiting them every few years. You will feel very good at least knowing you have a basic estate plan in place in case the unthinkable happens.
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