Most testators will usually appoint their surviving spouse or partner, children, close family or friends to act as their executors and trustees. Whilst there is nothing wrong with appointing family members and friends, there are a number of points that a testator may need to be advised of.
Where multiple people are being appointed, they should consider the personalities of those people and relationships between them. It would be highly inadvisable for example to appoint children to act together if it is well known that they do not get along, particularly for appointments as trustees for trusts that may last for a long amount of time, such as a discretionary trust.
Executors do need to be physically present to deal with the testator’s affairs. Appointing executors who live at the other side of the country or even abroad may not be the best decision if there are other options who live more locally to the testator.
When appointing trustees for bereaved minors or young persons trusts, the guardians are likely the best placed to know the children’s specific needs, so they are a potential option to be named as the trustees. If they are sole trustees however there could be a risk of potential misuse or a conflict of interest. To balance this, independent people could be appointed to alongside them.
Spouse as Sole Trustee
Where a trust is included in favour of the spouse, it is advisable to include other trustees to act jointly with them in order to prevent any conflict of interest due to the spouse being sole trustee as well as primary beneficiary. This is particularly applicable when including a trust where powers to advance capital are included, such as a discretionary trust or FLIT.
Likewise, if children are appointed as trustees for a trust in favour of a spouse they may act too cautiously in order to preserve the assets that they would inherit on the spouse’s death.
Whilst a bankrupt person can technically be appointed, there are some functions that a bankrupt executor or trustee would not be able to complete and we therefore advise that alternative options are considered.
If the estate is complex or trust is likely to be complex, it should be considered whether the suggested persons would have the required skills to administer the estate or manage the trust. Professionals would normally be advisable for testators with complex affairs.
Protecting a Beneficiary
Where a trust is being included to protect assets for a certain beneficiary, for example due to alcohol, drug or gambling addictions, it would be advisable to not include that beneficiary as a trustee of that trust.
Whilst a person may have a number of people that they wish to be their executors or trustees, they should be reminded that only a maximum or 4 people may act as executors or trustees at the same time. The clients could also consider naming reserve beneficiaries.