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Differences between the roles of Executor and Trustee
Consultant, Kimi Shah, discusses the important distinction between Executors and Trustees:
Summary
The roles of an executor and a trustee, though often held by the same person, have distinct responsibilities in managing a deceased person’s estate.
Role of the Executor: The executor administers the deceased’s estate by collecting assets, paying debts and taxes, and distributing assets to beneficiaries as per the Will.
Role of the Trustee: Once the estate is settled, the trustee holds and manages the assets in accordance with the terms of the trust, ensuring that the beneficiaries receive their entitlements.
Do you know the difference between an Executor and a Trustee?
One of the requirements of a valid Will is to appoint an executor. However, an executor’s role is quite limited. One of the tasks an executor is required to do is collect assets of the deceased. What happens next? Once the assets are part of the ‘estate’, the executor’s role ends and the trustee’s role begins.
In modern times, the role of an executor and a trustee has a lot of similarities, and now, usually the same person is appointed for the two roles. However, there are some differences between an executor and a trustee which we discuss below.
What is an Executor and what is their role?
The role of an executor is to administer the assets (estate) of a deceased person in accordance with the terms of their Will.
The principal duties of an executor are to get in the assets of the deceased, to pay debts including any tax, to pay the legacies outlined by the Will, and to distribute the assets to the beneficiaries.
the role of the trustee
Once a ‘trust’ has been established, the executor’s role ceases. It becomes the role of the trustee to hold the property on behalf of the beneficiaries and deal with it in accordance with the terms of that trust. If new assets are discovered whilst the executor is acting as a trustee, then they will take on the new assets as an executor.
What is a Trustee and what is their role?
Once the executor has located all the assets and transferred them to the ‘estate’, the trustee holds the legal interest in those assets until they are distributed or disposed of. If the deceased provides for part of the estate to be held in a trust (such as a testamentary trust), it becomes the role of the trustee to hold those assets.
Why is this distinction important?
The distinction is important as there could be legislative implications depending on whether an executor or trustee is acting. For example, there may be some legislation that only applies to executors and other legislation to trustees.
Further, the rights of beneficiaries also differ depending on whether the assets are held by an executor or a trustee. It is arguable that
a beneficiary under the deceased’s Will has no beneficial interest in the estate as the residuary estate does not come into existence until the administration of an estate is complete; and
until the administration is complete there is no property vested in a trustee which a beneficiary may have a beneficial interest in.
How can HHG Legal Group help?
If you are an executor, trustee or a beneficiary and have any questions about a deceased estate or trust, please contact us.
*The information provided in this website serves as a general guide and does not constitute legal advice. It is based on our research and experience at the time of publication. Please consult our knowledgeable legal team for any specific inquiries or advice relevant to your circumstances, as the content may not have been updated subsequently.