Trustor vs Trustee
As someone who is dealing with an inheritance dispute, you might be wondering what a Trustor vs Trustee is. And what are the differences? While a trustor creates a trust, a trustee manages it. So what are the significant similarities or differences between a Trustor versus Trustee? This article will discuss the essential duties of trustors and trustees and how they are equally crucial for proper trust administration and management.
Trustor’s Duties
The trustor is the person who creates the trust. Very often, the trustor is the trust’s first trustee, but the trustor’s role differs from the trustee’s.
The trustor determines everything significant about the trust. A trustor appoints the first trustee and nominates all the successor trustees. The trustor can appoint themselves as the initial trustee or ask someone else to serve.
A trustor chooses the terms of the trust. The trustor decides who benefits from the trust. While the trustor is alive (usually the trustor and their spouse) and who inherits when the trustor dies. The trustor picks the beneficiaries and chooses on what terms they will inherit. It could be all at once, over a period of years, or at predetermined ages, among other options.
The trustor decides what assets will fund the trust. The trustor may also choose who will receive what assets. For example, the trustor may want their home to go to a specific person but have everything else they put in the trust evenly divided between their children.
Trustee’s Duties
The trustee is the person responsible for managing the trust. This role begins when the trust is created and funded. That’s why so many trustors choose to serve as the trustee of their own trust initially. When the trustor becomes incapacitated or dies, the trust administration must continue. For that reason, a successor trustee will be appointed after the trustor can no longer serve as trustee.
Whether the trustor is alive or has passed away, the trustee has numerous duties to the trust beneficiaries. If you want to know more about those duties, check out our blog post, 20 ways your trustee can be breaching their fiduciary duties, to learn more about your rights as a beneficiary.
The trustee is required to follow the trust’s terms. That may mean managing and investing trust assets to generate income for a living trust or preserving the trust’s assets for distribution after death.
Because the trustee is the legal representative of the trust, the trustee is responsible for filing fiduciary income tax returns. If the trust owes taxes, the trustee is responsible for paying those taxes. If no taxes are owed, the trustee still has to file the return so the IRS and Franchise Tax Board know that no taxes are owed.
More on Trustor vs Trustee
If you would still like more information on Trust Litigation and removing a Trustee, check out our complete Overview of California Trust Litigation, available on our website. And if you have more questions about your rights as a Beneficiary and what you should know moving forward.
It’s best to reach out as soon as possible. The longer you take, the more damage your trust could take. Please call us at (888) 443-6590, and we would be more than happy to see if we can assist you.
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