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What is the Difference Between Trustee, Executor, and Power of Attorney?

Nathan R. Olansen
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Key Takeaways:

  • The overarching goal of any trustee, executor, or power of attorney is to work in the best interest of the creator of the documents.
  • A trustee will be responsible for administering and managing trust assets according to the terms included in the legal document.
  • The estate executor, named in a last will and testament, steps in once the individual is deceased and will be tasked with administering the estate assets, paying any final bills, notifying beneficiaries and creditors, and filing and overseeing the Virginia probate process.
  • A person can decline the role of executor in Virginia by providing a letter to that effect to the probate court, which will then name a new executor based on the terms of the will.
  • A power of attorney can make decisions for another person who may or may not be incapacitated at the time and can be responsible for healthcare, financial, and legal matters.

Estate planning involves different types of documents, legal terms, and even roles to assign. As the testator (the person creating the estate planning documents), naming your trustee, executor, and power of attorney will be an important part of your planning, and understanding the position each one holds in the Virginia probate process will be imperative. Essentially, all of these positions have one overarching goal — to work in the best interest of the testator. Yet, it is also important to note that everyone is busy today with their own lives, and adding another role to someone’s day can cause them to feel overwhelmed.

Distinct challenges exist for trustees, executors, and power of attorneys, so you need to find the people you can count on to fulfill these roles in the ways you wish. Whether you are in the process of creating your estate planning documents or find yourself in the role of trustee, executor, or power of attorney, seek the legal advice and guidance of a Virginia estate administration attorney so that you can take the necessary steps when fulfilling your obligations.

Exploring Article 8 of The Virginia Uniform Trust Code: Duties and Powers of Trustee

A trustee or successor trustee will administer the trust by following all the terms outlined in the trust document. They will also be tasked with notifying, updating, and distributing those remaining trust assets to the designated beneficiaries. As such, it is important to note that a trustee who carries out fiduciary duties does not need court authorization to proceed but will be responsible for taking steps that meet all legal and financial guidelines.

Va. Code § 64.2-777. General Powers and Responsibilities of Trustees in Virginia

To help the trustee fulfill their role, the Code of Virginia provides what powers and responsibilities reside with them. Essentially, the trustee will have powers set forth in the trust terms and as designated by statutory law. These terms may include limitations, but generally, the trustee will have power over investments, management, and the distribution of property included under the trust, and will also need to file all required tax returns.

For help with interpreting and understanding the powers and responsibilities of a trustee, consult with an experienced Virginia Beach trust administration attorney.

What Are Some Frequently Used Trusts in Virginia?

All trusts in Virginia are not the same. Some of the most frequently created types include the following.

  • Revocable living trusts: Creating a revocable living trust is a valid way to avoid probate by removing the individual’s name from property and assets and replacing it with the name of the trust itself. One of the biggest advantages to this type of trust is that it can be revoked or amended at any time so long as the testator is alive and has capacity. Also, such trusts are beneficial to those who become incapacitated at some point and unable to administer their own affairs. Revocable living trusts are usually less costly to administer and remain private.
  • Irrevocable trusts: Irrevocable trusts, once finalized, cannot be revoked or altered in any way and become permanent (although there are exceptions). An important benefit of this type of trust is that it can serve as a tax planning tool, such as if the testator seeks to minimize the estate’s federal tax liability by placing assets in the irrevocable trust that remain outside the testator’s estate.
  • Testamentary trusts: A testamentary trust is included in a last will and testament instead of a separate legal document. As such, this type of trust will be subject to the oversight of the courts. Management of assets under a testamentary trust only becomes possible for the trustee after the creator is deceased. It is beneficial to note here that testamentary trusts, unlike revocable living trusts, are, in general, prolonged, expensive, and will become part of the public record when they are recorded as part of the probate process.
  • Pet trusts: Today, pets are a significant part of the family, and providing for their care in an estate plan is more common than ever. Virginia recognizes this desire and has enacted a statute that authorizes trust creation for the benefit of these cherished pets. Within the terms of the trust, the creator can name a caretaker and also set aside a set sum of funds to only be used for the pet’s benefit and care.
  • Charitable trusts: Establishing a charitable trust is a way to share assets with a charity or organization of choice. For instance, the testator may wish to support art endeavors, educational opportunities, or health aids.

Understanding Estate Executor and Administration in Virginia

Two men meeting and looking at a tablet together

The estate personal representative, referred to as the executor in Virginia, is in charge of administering the decedent’s estate. This administration can the management and distribution of real, intangible and personal property owned by the testator, and requires supervision as part of the Virginia probate process. Essentially, the ultimate role of the executor is to make distributions to all the beneficiaries listed in a will and meet the legal duty of carrying out the terms of the decedent’s will.

Responsibilities of Estate Executors in Virginia

Along with the title of estate executor come various expected duties, called “fiduciary duties”. Some of these fiduciary duties include:

  • Filing and overseeing all steps in the probate process
  • Managing the decedent’s remaining assets, including those found in bank accounts, retirement accounts, and more
  • Identifying and paying final debts and expenses
  • Communicating with named beneficiaries and any creditors, including initial notice and updates
  • Defending challenges to the validity of the will
  • Making distributions to all beneficiaries, which under Virginia law, may include people, charities, and pets

What an Executor Cannot Do in Virginia

It is important to note that an executor cannot decide who gets the assets of the estate once a person is deceased. The will specifically names the selected beneficiaries and which assets go to each beneficiary. There is nothing for the executor to do but abide by those directions. They cannot take matters into their own hands and determine how much each beneficiary or any other person or organization can receive.

What Happens If I Decline the Role of Executor in Virginia?

Being named executor in a will is a big responsibility and can be a challenge. As such, you may be considering declining the role. In Virginia, you are allowed to do so but must provide a letter to the court to that effect. In certain jurisdictions, this letter may need to be notarized before submitting.

What will happen next depends on what is or is not in the will. That is to say, did the decedent name a co-executor in the will or an alternate executor should you be unable to fulfill the role for any reason? If neither of these are present, the probate court will appoint someone else to serve as executor.

Power of Attorney in Virginia and What It Entails

three people meet at desk with files and computer in view

As a power of attorney (POA), your role will differ in that you will be acting on behalf of another person (the “principal”) who may be incapacitated or chooses to have you make important decisions for them. A durable power of attorney gives an individual the legal authority to make decisions on behalf of the principal. Most often these decisions concern healthcare matters and financial decisions. As long as the principal has capacity, he or she retains the ability to make decisions on their own behalf or revoke or modify the POA and its decision-making power at any time.

POA Responsibilities and Tasks

Along with being designated as a power of attorney over another, this legal document will also indicate what type of decisions you will be responsible for making, such as legal, financial, or healthcare-related choices. Examples of the POA responsibilities and tasks you may need to undertake include:

  • Accessing and maintaining financial records
  • Identifying and paying bills while also keeping a record of these payments
  • Filing tax returns or other IRS documentation
  • Selecting medical providers and facilities and helping make healthcare decisions
  • Being involved with medical providers in developing a long-term care plan
  • Staying up-to-date on any legal matters that require attention
  • Managing real estate
  • Managing digital assets and cryptocurrency

The type of power of attorney and the duties involved can be challenging so you will want to be sure you understand how to fulfill this role to the best of your abilities. For help, seek the guidance of an experienced Virginia estate planning attorney.

How Do Trustees, Executors, and the Power of Attorney Work Together?

Whether you name a family member or other person to serve as the power of attorney, trustee, and executor of your estate, it is essential to understand key differences and how they work together. Certain dynamics and legalities are involved with each role.

  • The power of attorney is only authorized to act while the testator remains alive.
  • After death, the executor administers and closes the estate following the terms stated in the last will.
  • When it comes to executor vs. trustee, it is important to understand that the trustee maintains authority only over those assets included under the trust. Depending on the type of trust and terms of that trust, action may be required when the testator is alive or deceased.

Guard Your Virginia Estate with the Help of Estate and Trust Administration Attorneys

When it comes to estate planning, your challenges will depend on what assets you have and may accumulate in the future. You or a loved one will want all the proper estate planning documents created and the power of attorney, executor, and trustee designations decided ahead of time. The estate and trust administration attorneys with the Midgett Preti Olansen law firm in Virginia can help you prepare your estate plan and assist in its various administration requirements.

To find out more or to schedule a consultation with one of our attorneys, call 757-687-8888 today or submit our online contact form at your convenience. With an office in Virginia Beach, we proudly serve clients within northeast North Carolina and the Hampton Roads area, including Norfolk, Newport News, Chesapeake, Hampton, Suffolk, and Eastern Shore.

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Written By Nathan R. Olansen

Shareholder

Nathan R. Olansen is a Shareholder in the law firm of Midgett Preti Olansen. His practice is focused on estate planning, probate and trust administration, IRS and state and local tax audit and tax collection cases, as well as individual and entity tax planning, asset protection and a variety of related transactional matters.

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