Executors are the people who ensure that someones Estate is wound up and that their assets are distributed in accordance with their Will.
It is often thought of as an honour, and an expression of great trust, if a family member or friend asks you to act as executor in their Will.
But do you really understand the obligations and responsibilities that come with this honour?
When somebody dies the Executors will usually need to apply for a Grant of Representation, otherwise known as a Grant of Probate, before the wishes of the deceased can be carried out in accordance with the Will.
All appointed Executors must sign the form applying for Probate although an Executor can renounce their position if they are unable or unwilling to act when the time comes.
Executor’s responsibilities:
If you act as an Executor to a Will you are required to;
Register the death and obtain the death certificate
Arrange the funeral
Locate and identify the assets and any liabilities of the Estate
Deal with the administration of the Estate according to law by collecting in these assets
Determine the beneficiaries
Apply to the Court for a Grant of Probate of the Will.
Make sure all claims and debts are received, assessed and paid if substantiated
Arrange for the distribution of the Estate in accordance with the terms of the will
Prepare accounts
Deal with taxation returns
Defend litigation
An Executor is entitled to have proper expenses paid out of the Estate, so that the task should not normally be a financial burden.
The task of dealing with the administration of an Estate can feel too burdensome for many people, especially when they are going through the process of grieving.
Executors can, and often do, appoint professional Executors at the expense of the Estate to deal with its administration.
Executors can decide how much of the work they would like to do themselves. They may, for example, just want assistance in completing the tax forms.
Trustees
Executors are normally referred to as Trustees in your Will, unless the person making the Will has made an appointment for a trust in their Will, in which case specific trustees will have been named to administer the trust, who may or may not be the same people that were appointed as Executors.
Ideally Trustees should not be beneficiaries as this could be a conflict of interests, and we recommend that an independent Trustee is appointed (ideally a professional).
Trustees’ responsibilities:
Managing any Trust that might arise in a Will;
Holding funds for children until the date specified in the Will or until a child’s 18th Birthday;
Trustees are bound to act carefully and properly and in accordance with the various Trustee Acts and will need various powers in relation to these Trust Funds, such as the power to pay monies for maintenance or education of a beneficiary. These powers are contained in most Wills produced (The Society of Trust and Estate Practitioners (STEP) provisions);
A Trustee is entitled to have proper expenses paid out of the Estate, so that the task should not normally be a financial burden.
Similar to Executors, Trustees can appoint professional trustees at the expense of the Estate, to deal with its administration and act in a professional capacity along with the originally appointed trustees.
Trustees Duties - When a Trust Arises
Trustees have a fiduciary duty to look after assets held in the trust (the trust fund) for the beneficiaries. This is a position of trust and good faith. Trustees have a duty of loyalty, must be honest and have integrity, act in good faith and be transparent.
Some of the duties of a Trustee:
Act in the best interests of the beneficiaries and act fairly between them;
Not allow themselves to be put in a position where there is a conflict of interests;
Take advice and reasonable care in making investments and keep these under regular review;
To read and fully understand the trust instrument and comply with its terms;
To keep accounts;
To act unanimously;
To distribute to the correct beneficiaries at the correct time and in the correct amounts.
So, whilst being asked to act as an Executor or a Trustee for a family member or a friend may certainly be one of the greatest honours that anyone could bestow on you, this honour comes with significant duties and responsibilities and should not therefore be entered in to lightly.
If you are considering making or reviewing your Will, you may want to consider appointing a professional Executor and/or Trustee firm to assist any individual Executors.
Just ask us for information and we would be happy to make the necessary arrangements and introductions.
Comments