Following a death, the world of the administration of an estate can be a confusing time for loved ones. There is a significant degree of terminology those dealing with an estate need to comprehend and understand.
If someone dies with a will, the will should make provision for executors and trustees but what is the difference and what are the individual duties and responsibilities for each?
What do executors do?
Executors are the persons who will administer the estate. The executors will need to investigate and collate date of death values for all of the assets and liabilities of the estate. They would then need to determine whether inheritance tax is liable, submit the tax returns and make payment of any inheritance tax due.
The executors will need to make an application for a grant of probate. Probate is a legal document that reaffirms the validity of the Will and the powers of the Executors. This document will give the executors the authority to encash the assets within the estate and, more particularly, sell any property. They will, after they have collected the assets, settle any liabilities and claims against the estate and finally distribute the estate in accordance with the Will.
What does it mean to be a trustee of a will?
The will may also create a trust. This could be an automatic trust created because, for example, a beneficiary is too young to receive the inheritance due to them. Alternatively, the deceased may have incorporated a life interest trust into the will, giving a beneficiary (“the Life Tenant”) a right to occupy a property for their lifetime. The remaining trust fund passes to alternative beneficiaries on the death of the life tenant. There are many different types of trust that can be created by a will.
If a trust is created, normally, the executors would “switch hats” from their positions as executors to that of Trustees. The trustees become the custodian of the trust funds and will act in accordance with the terms of the trust. They would manage the trust funds, and if needs be, invest the trust fund in accordance with professional financial advice. The trustees may need to make payments, indirectly or directly, to a beneficiary when the trustees feel it is reasonable to do so. Alternatively, the trustees may be obliged to give the beneficiaries income by right. The trustees have to act within the parameters of the trust otherwise they will be in breach of the trust and potentially become personally, financially responsible for any loss caused to the trust.
Who is the administrator of a will?
An administrator is the person appointed to administer an estate where there are not any executors appointed by the deceased. A will, where all the appointed executors have either died, lost capacity or simply do not wish to act, will lead to an Administrator being appointed. The administrator in this situation would be, in the first instance, a residuary beneficiary. Conversely, where someone has died without leaving a will, then their estate would pass in accordance with the rules of intestacy. Legislation dictates who from those who would benefit from the intestacy rules, would be entitled to apply to act as an administrator.
Trusts may also arise from Intestacy where there are, for example, minor beneficiaries. Similar principles apply.
Executors, trustees, administrators are only a few of the various terminology arising through the administration process of a loved one. The terminology and requirements, when dealing with an estate, can be confusing and worrying.
How Moore Barlow can help
Here at Moore Barlow, we have dedicated, sympathetic and incredibly knowledgeable personnel who would be more than able to guide you through this daunting process. If you require expert legal advice on this topic and would like to discuss it further, please contact our private wealth team today.