Guidelines for Individual Executors & Trustees

Guidelines for Executors and Trustees: What You Need to Know

At RJ Fichera Law, we believe Estate Planning is more than preparing documents—it’s a process of caring for your family’s future. We take the time to meet with you and review your legacy plans. 

When the time comes, we’re here to guide your loved ones through Probate or Trust Administration with clarity, compassion, and precision.

If you have been named as an Executor under a Will or as a Trustee of a Trust, you have accepted an important fiduciary role. Whether you anticipated this responsibility or are stepping in unexpectedly, understanding your duties is crucial. This article outlines your legal obligations, provides answers to common questions, and highlights best practices to protect you—and the Estate or Trust you are managing.

Key Terms You Need to Know.

Before we address your specific responsibilities, it’s important to clarify a few commonly used terms. Understanding these terms Will help you better interpret the Will or Trust and perform your role effectively.

Beneficiary. A person for whose benefit a Will or Trust was made. Beneficiaries receive property under the terms of the Estate Plan, either outright or held in Trust for future distribution.
📌 Example: “I give my granddaughter, Nina, my grandfather clock” or “I give $50,000 to my niece if she survives me.”

Executor. Also known as a Personal Representative (and historically, an “Executrix” for women), the executor settles the Estate of a Testator according to the terms of the Will. If there is no Will, this role may be filled by an Administrator in accordance with state intestacy laws.
📌 Example: “John Doe, Executor of the Estate of Jane Smith, Deceased.”

Fiduciary. An individual or institution (such as a bank or Trust company) who acts on behalf of another in a position of Trust. Executors, Trustees, and Personal Representatives are all fiduciaries, legally bound to act in the best interests of the beneficiaries and the Estate or Trust.
📌 Example: A fiduciary must avoid self-dealing, such as purchasing estate property for themselves without proper approvals.

Grantor. Also known as the Settlor or Trustor, the Grantor establishes a Trust by transferring property into it, subject to the terms of the Trust agreement. For income tax purposes, the Grantor may also refer to the person taxed on Trust income—two different concepts often causing confusion.
📌 Example: “Mary Smith transferred her home and investment accounts into the Mary Smith Living Trust dated January 1, 2022.”

Principal and Income. Principal refers to the original property or capital of an Estate or Trust. Income refers to the returns generated by that property, such as interest, dividends, or rents. Gains from appreciation may sometimes be treated as income, depending on the governing instrument or applicable law.
📌 Example: A Trust may provide that the income be distributed annually to a spouse, while the principal is preserved for future beneficiaries.

Testator. A person who has made a valid Will. Historically, a woman may be called a “Testatrix.”
📌 Example: “Jane Doe, as Testator, directed that her estate be divided equally among her children.”

Trustee. An individual or institution who holds legal title to Trust property and manages it according to the terms of the Trust agreement. A Trustee may also be a Beneficiary of the same Trust, which can create complexities requiring careful adherence to fiduciary duties.
📌 Example: “John Smith, Trustee of the Jane Smith Family Trust dated March 3, 2020.”

➡️ Additional defined terms can be found in our Glossary.

Your Role as Executor or Trustee: Understanding the Fiduciary Duty.

Both Executors and Trustees serve in a fiduciary capacity, which means you have a legal obligation to act solely in the best interests of the beneficiaries and the estate or Trust. You must avoid conflicts of interest, act with prudence, and manage the assets responsibly.

At RJ Fichera Law, we advise clients to engage an attorney early in the process to understand their role thoroughly. Accepting the role of fiduciary comes with personal liability, and an attorney’s guidance is essential to fulfilling your duties and protecting yourself.

Understanding the Documents: The Foundation of Your Role.

The Will or Trust Agreementsets the framework for your actions. It’s essential to understand:

• Who the beneficiaries are.
• What assets they are to receive and when.
• Whether assets are to be distributed outright or held in Trust.
• Whether the fiduciary has discretion in distributions (e.g., "distribute as needed for education and support") or if distributions are mandatory.

➡️ Example: "My Trustee shall distribute income as she believes necessary for the education and support of my son, Alan, until he reaches age 25."

Within the Will and/or the Trust documents you should also find instructions about:

•  Which Assets to Use for Paying Debts and Taxes. "I direct my Executor to pay all my legally enforceable debts, funeral expenses, and expenses of administering my Estate from the residue of my estate. The payment of any federal or state inheritance or estate taxes attributable to property passing under this Will or otherwise shall be paid from the residuary estate, without apportionment or reimbursement from any recipient of such property."

➡️ Explanation: This clause tells the fiduciary to pay debts and taxes from the general residue of the Estate rather than charging them proportionally against specific beneficiaries.

• Whether Specific Trusts Must Be Established (e.g., for a Minor Beneficiary or a Surviving Spouse). "If my son, Alan, has not attained the age of twenty-five (25) at the time of my death, I direct that his share be held in trust. The Trustee shall distribute to or for Alan’s benefit as much of the net income and principal as the Trustee determines necessary for his health, education, maintenance, and support. Upon Alan reaching the age of twenty-five (25), the remaining trust property shall be distributed to him outright." Or, "I give the residue of my Estate to my Trustee, in trust, to hold and administer for the benefit of my spouse, Nancy. The Trustee shall pay to my spouse all net income at least annually and may distribute principal as the Trustee determines necessary for her health, support, and maintenance."

➡️ Explanation: These are examples of Testamentary and continuing Trusts created for beneficiaries who may be minors or spouses who need long-term financial support.

• Powers Granted to You as a Fiduciary (e.g., the Power to Sell Property or make Investments). "My Trustee shall have the power to sell, exchange, or lease any real or personal property belonging to the trust estate, at public or private sale, for such price and on such terms as my Trustee deems advisable, without court approval." Or, "My Executor shall have full power and authority to invest and reinvest any portion of my Estate in any kind of property or security, including, but not limited to, stocks, bonds, mutual funds, or real estate, without being limited to those investments authorized by law for fiduciaries."

➡️ Explanation: These provisions grant broad discretionary powers to the fiduciary, enabling them to manage the Estate or Trust assets efficiently, including selling property and making investment decisions without court oversight.

Securing and Valuing the Assets: Your Immediate Responsibility.

Once you’ve been formally appointed (typically after obtaining Letters Testamentary from the court for an Estate), your next job is to marshal all the assets of the Estate or Trust.

This includes:

• Collecting bank and brokerage accounts.
• Taking possession of personal property (vehicles, jewelry, collectibles).
• Gaining control of real estate.
• Reviewing and securing life insurance or retirement account benefits.

Valuing these assets is crucial:

• Hire appraisers for valuable items or unique assets (artwork, rare collectibles).
• Obtain formal valuations of real property and business interests.
• Review insurance coverage to protect estate or Trust property during administration.

➡️ Example: If the decedent owned an antique car collection, you would need a specialist appraiser familiar with collector vehicles.

Paying Debts and Expenses: Fiduciary Duty in Action.

As fiduciary, you are responsible for:

• Identifying legitimate debts and claims.
• Notifying creditors formally (as required by state law).
• Paying funeral expenses, outstanding bills, and ongoing maintenance costs.
• Filing tax returns and paying taxes due (final income tax, estate tax, fiduciary income tax).

➡️ Example: Failure to pay real estate taxes on a property in the estate could result in penalties or a tax lien—ultimately your responsibility.

In complex Estates, you may need to:

• File estate tax returns (even if no tax is due, in some cases for portability of exemptions).
• Address prior year tax filings the decedent may have missed.
• Plan distributions carefully to minimize overall tax liability.

Distributions to Beneficiaries: Completing Your Duty.

You may begin distributing assets to beneficiaries after confirming that all debts, taxes, and expenses are satisfied.

Distributions can include:

• Specific bequests (cash or property).
• Residuary gifts (remaining assets).
• Ongoing Trust funding for minors or beneficiaries needing structured distributions.

➡️ Example: “I give my antique grandfather clock to my granddaughter, Nina.”

➡️ Caution: It’s standard practice to obtain receipts and refunding agreements from beneficiaries. In some cases, you’ll need court approval before distributing assets.

Trust Administration: A Continuing Role.

If the estate plan creates a continuing Trust, your role as Trustee involves ongoing management of the assets:

• Make prudent investments, consistent with the Prudent Investor Rule.
• Follow the Trust’s instructions regarding income and principal distributions.
• Provide regular reports and tax documents (Schedule K-1) to beneficiaries.
• File fiduciary income tax returns annually.

➡️ Example: A Trust may state, "All income is to be paid to my wife, Nancy, annually, and principal distributed as needed for health expenses."

REMEMBER, beneficiaries have rights, and clear communication helps avoid misunderstandings. Document every action and decision.

Closing the Estate or Trust: Bringing the Administration to a Close.

Once you have completed all tasks, paid all obligations, and made distributions, you can petition to close the Estate or Trust.

• Some states require court approval.
• Others allow informal closure with written releases from beneficiaries.

➡️ Best practice: Obtain beneficiary sign-offs acknowledging their distributions and approving your administration. This protects you from future liability.

Frequently Asked Questions.

How do I title accounts?
➡️ Estate: “Alice Carroll, Executor of the Estate of Lewis Carroll, Deceased.”
➡️ Trust: “Alice Carroll, Trustee under agreement dated January 19, 1998.”

Can I be paid?
Yes. Compensation may be stated in the Will/Trust or determined by state law. Always consult an attorney before paying yourself—some states require court approval.

What if a beneficiary complains?
Maintain open communication. Many disputes arise from a lack of information. If serious issues arise, involve legal counsel immediately.

Can I be personally liable?
Yes. Fiduciaries are personally liable for mistakes such as late tax filings, improper distributions, or failure to safeguard assets.

How do I resign or conclude my role?
You may need court approval or the consent of all beneficiaries. Review the documents to confirm any successor appointments.

Note: This is based on an that article was published by American Bar Association Real Property, Trust and Estate Law Section, and brought to you by the RJ Fichera Law Firm , where our mission is to provide trusted, professional legal services and strategic advice to assist our clients in their personal and business matters. Our firm is committed to delivering efficient and cost-effective legal services focusing on communication, responsiveness, and attention to detail. For more information about our services, contact us today!

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