When I lived in Brooklyn, I would wander down to a nearby park to play chess. The well worn tables were usually occupied by some of the most incredible chess players I'd ever met. I was beat several times by a 14 year old chess master, but every time I played I became better at protecting my King. This is a lesson that is useful in estate planning and thankfully I'm a better lawyer than I am a chess player. Let's imagine that the people involved in your estate plan are your chess pieces. They each have a particular duty, power or role. For the most part, their purpose is to defend your assets, ie your King. While the king himself isn't a powerful player, he is the reason all the other pieces are on the board; this is essentially how your assets function.
In the world of estate planning, as in the game of chess, there are quite a few moving pieces. And as with chess, you can not protect your most valuable assets unless you know who's who and how they function.
Testator
The testator is a
person who makes a will. A woman who makes a will may be referred to as a
testatrix.
Beneficiary
When used in reference to estate
planning, a beneficiary is someone who receives money, property, profits, and
other property as a result of a trust, will, life insurance policy , or other method
of gift giving.
The following terms are sometimes
used to distinguish between types of beneficiary.
Devisees
are the beneficiaries of a will who receive real property ( home, office
building, apartment complex, other forms
of real estate)
Legatees
are the beneficiaries will who receive personal property ( jewelry, art,
collections)
Noteworthy Tidbit
-The terms beneficiary is generally adequate and covers all types of gifts.
-Personal property is generally anything that you can move around or hold.
-Personal property is generally anything that you can move around or hold.
Trustor – also called Grantor, Settlor,
or Donor
Trustee
A
trustee is the person that holds, manages, and or maintains the property held in a
trust for the benefit of the Beneficiaries. She has the duty to distribute the
property at a predetermined time or event. As the name indicates the trustee
should be someone who is trustworthy and have the ability to manage the trust
assets. A trustee owes a duty of loyalty to the Beneficiaries of the trust,
which means she must act in the best interest of the beneficiaries at all
times.
The Trustor may
serve as trustee of the assets until she dies or at some predetermined date or
event.
A
successor trustee becomes trustee if the originally named trustee is unable
to serve as the trustee. A trustee may be unable to serve due to incapacity,
death, or unwillingness to serve as trustee. A successor trustee is usually
chosen by the settlor and named in the trust document.
Co- trustees exist when there is more than one
trustee for the same trust.
Below is a list
of rights and duties a trustee may have. This list is not a complete list of
duties and a Trustor may limit and designate more narrow or broad duties.
- Invest the
trust assets
- Sell trust
property
- Keep an
accurate accounting of the trust assets
- Bring a
lawsuit on behalf of the trust
- Defend the
trust in a legal suit
- Distribute
trust assets to beneficiaries
- Must remain
unbiased when dealing with beneficiaries.
- May not use
the trust assets for his own benefit (Even if he is a named beneficiary of the trust, he still has a duty to act in the
best interest of all of the beneficiaries and must do so impartially.
He may be removed by legal action if found to be acting in a way that is not loyal to the trust
beneficiaries)
Executor (also known as a Personal
Representative)
The executor is the person who wraps up the
affairs of the deceased testator (will maker). He is designated in the Will and
usually is tasked with submitting the will for probate. The executor is obligated to act
to satisfy the testators wishes as spelled out in the will. She is also
responsible for paying any remaining debts and taxes on the behalf of the
testator. An executor must be over the age of 18 years old.
Administrator (also may be known as a
Personal Preventative)
An administrator
acts in the same way as an Executor but represents the interests of someone
who dies without a will. She is usually a spouse or trusted family member of
the person who has died. She may be appointed by the court in the case where
there is no clear designation or where a named executor refuses to serve.
Guardian
A guardian
serves as a sort of trustee, but rather than manage assets, he manages people. A
guardian is responsible for the well being and care of a person. A guardian is
usually chosen and named in a will document when the testator has minor
children, but a guardian may care for an adult who is incapacitated. He may also petition for
guardianship. If a guardian is not chosen in a will or estate document, a judge
may appoint one.
Ward
The ward is the person the guardian is caring
for.
Conservator
A conservator is appointed by the court to
manage the financial affairs of an underage child or an incapacitated adult.
The conservator may be the same person serving as the guardian.
Protected person
The protected
person is the person whose estate the conservator has legal power over.
Noteworthy Tidbit
- What’s the
Difference? The Guardian has power over the person; the Conservator has power
over the estate of the protected person.
- A Guardianship
or Conservatorship may be ended if the ward/protected person can show to the
court that they no longer need the protection and care of the guardian or
conservator.
Trust Protector
The trust protector is an uninterested third
party, usually an attorney, financial advisor or bank, that makes sure that the
trust is being taken care of the way the Trustor intended. He is usually not
called to duty until someone, usually a disgruntled beneficiary, calls the Trustee’s behavior into question. The trust protector may remove a Trustee who
is violating his duty of loyalty and replace him or act as Trustee until she
finds a suitable successor trustee. Trust protectors are usually entitled to
payment.
Next week's article will cover trusts. If there is a term or explanation in this post that is still unclear please ask for clarification by posting your inquiry in the comments section or emailing us at Info@KeovonneWilsonLegal.com
Keo'vonne W.
"Turn Your Dream Into Your Legacy"
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