As you begin to think about your estate plan, you will need to consider the persons that you would like to have involved in your plan. Obviously, this includes your beneficiaries—those persons that you would like to receive property from your estate. Not so obvious are those persons that you would like to serve as executor, trustee, and guardian. While not as frightening as lions, tigers, and bears, thinking about those persons that you want to serve as your executor, trustee, and guardian may be worrisome. Having a general understanding of the roles and responsibilities of each will help you navigate the road towards a sound estate plan.
After your death, your Will is filed with the clerk of court to start the probate process. The court will generally appoint the executor nominated within the Will to carry out the terms of the Will. The executor must be at least eighteen years old and, in Iowa, it is preferred that the executor be an Iowa resident. The primary responsibilities of an executor are to gather the assets of the estate, to pay final expenses and outstanding creditors, to file tax returns and pay any taxes that are due, and to distribute the assets remaining in the estate to the beneficiaries in accordance with the terms of the Will. There are statutory guidelines—the Probate Code—for an executor to follow when carrying out the executor’s responsibilities. In most cases, the executor will retain an attorney to guide the executor through the process.
The executor will serve on behalf of the estate from the time the estate is open until the estate is closed. The amount of time needed to administer an estate varies. Depending upon the type of assets within the estate and whether there are any disputes among the beneficiaries or with the IRS, the estate may be open for several months or for a few years. Upon completion of the estate, the executor will be entitled to reasonable compensation and be discharged by the court.
If you wish to include a trust in your Will, you will need to nominate a trustee within your Will. The trustee is responsible for managing and distributing the assets that are subject to the trust. A trustee is generally responsible for investing the assets in the trust and must do so in a prudent manner. The trustee must consider both the current beneficiaries, who may be receiving income, and the future beneficiaries, who may receive the principal from the trust. Thus, the trustees must invest the assets with both income and preservation of assets in mind.
Unlike an executor, a trustee is generally not appointed by the court. Instead of court oversight, the work of the trustee is generally overseen by the beneficiaries of the trust who are entitled to periodic reports from the trustee. Depending upon the terms of the trust, the trustee may serve for a short period of time or for decades before satisfying the terms of the trust. Similar to an executor, a trustee is generally entitled to reasonable compensation.
Finally, if you have minor children, you should nominate a guardian within your Will. Although the guardian is ultimately appointed by the court, the court will give preference to the person you nominate within your Will. The role of the guardian is to provide for the physical care of the person for whom the guardian has been appointed. A guardian is responsible for providing periodic reports to the court and, prior to taking certain actions, must get court approval. The length of a guardianship will vary depending upon the age and capabilities of the person subject to the guardianship. In the case of a minor child, the guardianship will terminate when the child reaches age eighteen.
As you determine who you would like to nominate as your executor, trustee, and guardian, be sure to consider the roles and responsibilities of each. Although not as obvious as the beneficiaries of your estate, the persons nominated as executor, trustee, and guardian are important to your plan and should be nominated only after careful consideration.