WillPack

Roles of executors and trustees

Who are trustees?

A trustee is someone who is given legal responsibility to hold property in the best interest of or for the benefit of someone else (the beneficiaries). As the name implies, the trustee acts under a “trust” to do what is best and to act in the interests of the beneficiaries and not themselves.

Number of trustees

No more than 4 trustees can be appointed to act at once, however reserve trustees can be appointed. If the property of the trust includes land a minimum of 2 trustees must be appointed.

Where a Trust is inserted within a Will in favour of a spouse (as a beneficiary) upon first death, it is almost always advisable that a MINIMUM of two other trustees be appointed to act jointly with the spouse. This is in order to prevent any conflict of interest due to the spouse acting as the sole trustee as well as being a primary beneficiary and having two other trustees will reduce problems arising from death, resignation, retirement or removal of one of them.

This is especially applicable where the will includes a Nil Rate Band Discretionary Trust where the primary beneficiary in each will is the surviving spouse or partner and the secondary beneficiaries by default are the children. Should clients’ wish to appoint the spouse as a sole trustee, as they are primary beneficiaries they would be permitted to make decisions regarding the Trust alone: for example, should the spouse want to borrow money from the Trust (under the loan scheme), she/he would simply take the money without the need to consult anyone else, as she/he is a trustee acting alone and also primary beneficiary. And when the spouse dies, there is no trustee to act in reserve.

Powers of a trustee

The Powers of trustees are set out in the Trustee Act 2000. The powers of a trustee include, amongst others, power to invest, of sale and to pay the capital of the trust to beneficiaries. The main purpose of the Act is to restrict the powers. But in many areas, the statutory powers can be extended (the restrictions can be reduced). Great care should be taken as to what powers are required in each set of circumstances. One historic problem for trustees has been the incomprehensible nature of trust deeds, so that most people would have great difficulty in understanding what they may or may not do as a trustee.

Trustees are appointed both privately and by law. For example, trustees will be appointed to look after any money belonging to a person unable to look after it for himself – through old age, or injury or infancy. However, the trustees most familiar to us are probably those responsible for a Will Trust. The executors in a deceased estate are trustees with a special task, namely the winding up of the estate.

Appointing different trustees for specific tasks

Sometimes a testator appoints a different set of people to be trustees. For example, when considering a discretionary trust for grandchildren, it may be sensible to find young trustees even though the testator may want specific other people to act as executors. Another example of different trustees may arise if guardians are appointed for children. It may be sensible to appoint the guardians as trustees only of a children’s trust.

When a testator, creates a Trust by his Will, it is usual for the executors to also act as the trustees of that trust.

The Trustee Act 2000 provides the framework within which trustees must act and their duties.

What is an executor?

An executor is a person appointed in a will to act as the testator’s personal representative. They are tasked with offering the will to probate, paying any debts of the testator and any taxes, to carry out the directions of the will and to distribute the estate as the will provides.

Who can I choose to be an executor?

Anyone over the age of 18, of sound mind and not in prison, can be an executor.

Children can be appointed as executors, but they cannot act until they are 18 years old. Beneficiaries can be executors. Executors will need to be around after your death, so it is advisable to avoid elderly people and for practical reasons it may not be advisable to appoint a person who does not live in close proximity to the testator as an executor

The most common choices are:

  • Wife, husband, partner, children
  • Professional adviser
  • Friend of the family, often a solicitor or accountant

Who you choose will depend on:

  • The degree of complication of your affairs
  • How those closest to you will cope if you were to die
  • How you rate the business efficiency of people on your list of possible appointees if the estate is complex
  • Whether there may be conflicts of interest in the family

Wife, husband, partner, children

There may be several candidates in this category. It is most unlikely that they will think in similar ways or have similar ideas about how to deal with your assets. As an executor, one person may want to sell your house quickly because he/she may want their share of the money fast. Another person may want to sell quickly because they are nervous that there will be no other bidder.

Another potential problem is balancing your children’s needs with the needs of your current partner. Suppose you leave your house and some money in trust for the life of your second spouse or partner, with a gift on their death to your children of an earlier marriage.

If your children are trustees, they may be cautious about the freedom they allow to your spouse or partner to move house and want to control what he or she buys and how money is spent. This is natural, since they will receive whatever is left when that person dies. We do not suggest you should be unhappy with this proposition, just that you should be aware of it.

If you do choose a family member, consider an absolute limit of three, preferably two, if no one will be offended at being left out.

Friend of family or professional

Such a person has no personal interest except the gratitude for your past friendship or business and possibly an interest in the work in winding up your estate.

The main benefit here is objectivity and neutrality.

The main downside is that a solicitor executor or trustee will want to undertake probate work and since he or she is then their own client, they can charge whatever they like, within reason.

In summary – solicitors are generally sound executors, but they are often very slow and they come at a price.

Under the Trustee Act 2000 a trust corporation or a professional trustee may charge a reasonable fee for their services. Executors who are not trust corporations or professional trustees may charge only if the will contains a paragraph which expressly authorises the payment. They may however, claim out of pocket expenses in any event. By far the best position is to provide in your will what professionals may charge.

Bank Trust Corporation

No one who operates a bank account can be unaware of the trust and probate services offered by their bank. Their advertising emphasizes their probity and eternity, both sound qualities; but says little about their charges or the quality of their work, we advise strongly against this category because:

  • Banks tend to charge even more than solicitors
  • It is almost impossible for beneficiaries to praise the probate away from a bank trust corporation. They are usually appointed as sole executors so, once appointed, they are their own customer
  • There is no effective mechanism for you to complain about bank charges
  • They are happy to pay for whatever specialist services best protect them and reduce the work they themselves must do, so cash is splashed out regardless
  • There is naturally a bureaucratic tendency to over-rely on professional advice – for example if an estate agent says sell, they will sell. This is not on account of any dishonesty, it is just to keep simple the lives of those who do the work
  • The same bureaucratic approach leads to inflexibility and slowness
  • The contact point, if any is with a system, not a competent individual

In summary, banks may charge more, but the main disadvantages arise from their recklessness with payments to others and the sheer bureaucracy of large organizations.

2 thoughts on “Roles of executors and trustees

  1. My husband died last year, we both have wills and all our assets were in joint names and I have dealt with everything required.
    Do I need to tell the solicitors of my husband’s death?
    I cannot find an answer to this question, please help.

    • Hi Chrystine,

      Sorry to hear about your husband. If you have executed the Will and given the necessary specific gifts from your husband’s Will, if there were any, then there may be no need to involve your solicitor. If there were any trusts in the Will, then you will need to get these set up, which will require either a Solicitor or Trust Corporation. I would say it would be courteous to inform your solicitor, in order for them to remove your husband from their books and files, especially if your solicitor has been working with you for a long time.

      Thank you and I hope this was helpful, Chrystine

      Lee

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