There are several ways to manage an Estate after the passing of a loved one. In most cases, this process involves gathering important information, managing financial affairs, and distributing assets and belongings to family members. A Fiduciary or Executor may be tasked with managing these various responsibilities on behalf of the deceased.
When looking at the roles of a Fiduciary vs Executor, there are key differences in what each title entails and how they can be involved in the Estate Planning process. The following article will break down the responsibilities of a Fiduciary and an Executor to help you navigate Estate Planning or the probate process.
Administering the Estate: Who Does What?
After the death of a loved one, the process of administering the estate must begin. Typically this starts when the decedent’s spouse or close family member files a death certificate with the court. Probate will then be initiated, and the court will validate any Estate Planning documents before the family can proceed.
Probate will continue if no challenges arise, taking anywhere from a few weeks to a few months. However, if there is no Estate Plan the court may need to take a more active role and appoint a personal representative on behalf of the deceased. In most states this will be the closest living family member.
During the probate process, family and friends must be notified, funeral arrangements made, and any outstanding debts paid. Any remaining assets and belongings must also be distributed according to the Estate Plan or a state’s next-of-kin laws. From there, the Estate can be officially closed.
Depending on the Estate Plan, different loved ones will take on different responsibilities. Many individuals choose a spouse, sibling, or child to take on the roles of Executor, Fiduciary, or Trustee when necessary. In more complex situations, attorneys or financial advisors may be incorporated when administering an estate.
The Role of the Fiduciary
A fiduciary is someone who acts on behalf of another individual, keeping their interests in mind to provide the highest standard of service or advice. Fiduciary roles are common in the Estate Planning process and include Trustees, Executors, Guardians, Conservators and attorneys.
Fiduciaries can be chosen by an individual or be court-appointed depending on the circumstances. When selecting a fiduciary it is recommended to choose someone you and your beneficiaries trust. The role of a fiduciary can be taken on by a close relative, friend, or even a professional.
A fiduciary has an ethical and legal responsibility, called the “fiduciary duty,” to provide the best form of care and loyalty to the decedent. Fiduciaries often have some form of financial responsibility, making this duty crucial to the success of the role.
The Role of the Executor of Estate
The Executor of an estate is the person in charge of following the terms laid out in a Will. The role typically involves gathering financial information, closing accounts, paying debts, and filing taxes as necessary. An Executor will also distribute inheritances to the beneficiaries named within a Will.
An Executor guides an Estate through the probate process, first by opening probate and then by navigating the decedent's wishes as included in the Will. When the terms of the Will have been completed, the Executor will schedule a final hearing to complete probate.
The role of an Executor can be somewhat time consuming. Because of this, many individuals will ask a close friend or family member before naming them as an Executor. It is also common to designate certain funds within a Will to the Executor. The Executor will receive this payment near the end of the probate process, after other debts have been settled.
What’s the Difference Between a Fiduciary and an Executor of Estate?
The difference between a Fiduciary and Executor of Estate comes down to the scope of responsibilities associated with each title. A Fiduciary refers to any individual acting on behalf of another, and in Estate Planning this often means in a legal capacity. An Executor, on the other hand, is a much more narrow responsibility. Executors can only act on the terms laid out in a Will.
Fiduciaries can encompass a wide array of responsibilities in the Estate Planning process, though they commonly refer to Trustees. Trustees manage the assets within a Trust on behalf of the Trustor (or, person who created the Trust).
There is some overlap between a Fiduciary and Executor relating to how they manage assets on behalf of another. All Fiduciaries, including Executors, must act in the best interest of the individual they represent at all times.
Is a Fiduciary the Same as an Executor?
A Fiduciary is not the same as an Executor, though an Executor could be considered a Fiduciary. Stay with me -- the simplest definition of a Fiduciary is someone acting on behalf of another person. In an Estate Plan, this definition could be applied to an Executor who is tasked with acting on behalf of the decedent.
As mentioned above, there are several different roles a Fiduciary can take on. For example, a Guardian or Conservator would be considered a Fiduciary as they both act on behalf of another individual. However, because of this broad definition, the term “Fiduciary” does not always refer to an Executor.
Create Your Estate Plan Today
There are numerous moving parts associated with administering an Estate and navigating probate court. If you have ever navigated this process on behalf of a parent or other loved one, you likely saw firsthand how important an Estate Plan is when delegating and managing these responsibilities.
An Estate Plan provides you with the opportunity to guide your own loved ones through this process, nominate a trustworthy Fiduciary, and protect your family legacy. In the absence of clear guidelines, these duties are often dictated by probate court and state law.
Consider creating an Estate Plan today with the help of our team, so you can be in control of your future financial affairs and personal wishes. The process can be completed directly from your own home, and our Estate Planning experts will provide support every step of the way.
When looking at the role of a Fiduciary vs Executor, it is important to know the full range of responsibilities involved. A Fiduciary can refer to several important roles in the Estate Planning process, depending on the situation at hand. The job of the Executor, however, is much more defined. This individual oversees the administration of an Estate based on the conditions of the Will.
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