Client’s Guide
Executor Responsibilities & Trustee Duties
A guide to help you understand the roles and responsibilities you will have to undertake as an executor and trustee
Executor Responsibilites & Trustee Duties
Executor Responsibilities & Trustee Duties
You have been named as an executor and/or trustee of a Will. This guide will help you understand your role and who you should contact for further advice and help.
The guide has been split into two sections, one outlines the responsibilities of an executor and the other the duties of a trustee.
Shane Fox Managing Director Principle Wills Ltd
The Role of Executor
What is an executor?
After someone dies, their estate, made up of their house, possessions, investments and cash needs to be sorted out; this process is referred to as dealing with the deceased’s estate. The person with the legal authority to deal with the estate is called an executor. It is the executor’s responsibility to manage and administer the estate as per the terms of the will until it has been fully disposed of.
Executor duties and responsibilities explained
Being named as the executor in a Will means you may have to deal with complicated, difficult and time-consuming duties which, in some cases, can take up to a year or more to complete. Occasionally, you may be called upon to deal with the deceased person’s estate after it has been distributed especially when other assets have been discovered or there are complex legal issues to deal with.
It is important to deal with the person’s estate correctly and in a timely fashion, because as an executor you are legally responsible for administering their estate in accordance with the terms of their Will and in line with any associated legislation.
As an executor you will have to deal with complex tax, legal and administrative work, so it is important that you are aware of what it is you are being called to do right from the outset.
It is these legal, tax and administrative responsibilities that overwhelm executors, which is why many turn to others for help and advice and why some delegate their responsibilities to others to complete.
Executor Responsibilites & Trustee Duties
Responsibilities and Duties of
an Executor
There are several responsibilities you will have as an executor:
1. Legal responsibilities
• You will usually have to apply for a grant of probate (a legal document that is sometimes needed to access bank accounts, sell assets, and settle debts after someone has died).
• You will need to identify and deal with any valid claims against the estate.
2. Tax responsibilities
• A set of IHT accounts may have to be completed. Once completed they will have to be submitted to HMRC so that inheritance tax can be calculated. If an IHT liability exists, as the executor you will have to arrange and make the payment.
• Tax returns for income tax and capital gains tax will have to be completed with outstanding tax amounts having to be paid or refunds claimed.
3. Estate administration responsibilities
• Relevant organisations will need to be notified of the person’s death. Correspondence and evidence of death will have to be submitted.
• Organisations will have to be contacted so that cash, investments, and property can be dealt with and any debts and liabilities paid.
• Time might have to be spent searching for documents and other correspondence to ensure all assets, monies owed to the estate and any settlements are claimed and dealt with.
• There could be a need to prepare and distribute estate accounts.
• Once all assets are accounted for and all debts and liabilities paid, the estate must be correctly distributed to beneficiaries as per the terms of the Will.
Executor Responsibilites & Trustee Duties
How long do the executor’s duties take?
The length of time it takes to administer an estate to its conclusion depends on the size and complexity of the estate, the time you as the executor can commit to it and how proficient you are at carrying out your duties, but in most cases, it can take up to a year to get everything done.
What is a breach of duty?
As executor you could be financially liable for any loss resulting from a breach of duty, even if the mistake you made was in good faith or because you were ‘ignorant’ of the fact. A breach of duty therefore includes the failure to:
• Pay the debts and liabilities of the deceased
• Pay all inheritance tax, income tax and capital gains tax due to HMRC
• Distribute funds to an individual who makes a successful claim against the estate
• Identify and correctly distribute funds to beneficiaries
It should be noted that creditors, i.e., people who are owed money from the estate, have the right to make a claim against the executor for up to 12 years after a person’s death has occurred if negligence on the part of executor can be demonstrated.
Executor Responsibilites & Trustee Duties
The
Roles of Trustee
What is a Will trust?
A Will trust is a legal structure which offers increased asset protection for those who are closest to the person creating the Will. They are commonly used when a person:
• Wishes to protect their estate (assets) against probable future care fee costs;
• Has a spouse or partner and children from a previous relationship;
• Wishes to leave some of their estate to a vulnerable or disabled person.
How do Will trusts work?
When a person makes a Will the people they name, called beneficiaries, are the ones who receive their estate when they die. However, there may be circumstances where a person would prefer their estate to pass to someone else to manage rather than pass to beneficiaries, directly, when they die. The people appointed in the will to hold estate assets on behalf of others are called trustees. It is they who will look after the trust assets on behalf of the beneficiaries to the trust.
Executor Responsibilites & Trustee Duties
What does a trustee of a Will trust do?
As trustee you will be responsible for managing trust property in line with terms laid out in the Will and other associated documents. Your overarching responsibility is to make sure that the decisions you make is in the best interests of ALL those who look to benefit from the trust.
As trustee you will have a legal, and a financial, responsibility to act according to the terms and conditions laid out in the will and to act fairly towards the trust beneficiaries making sure that none of them are disadvantaged by the decisions you make.
You will also have a duty of care under the Trustee Act 2000 to “exercise such care and skill as can be reasonably expected in the circumstances”. Consequently, as trustee your main duties will include:
• Compliance with the trust deed (contained within the Will) including the way trust assets are held and distributed;
• Acting impartially and in the best interests of all beneficiaries to the trust;
• Acting with reasonable care and skill in the management and administration of trust assets;
• Making sure you understand what assets are held by the trust and then to make sure they are kept safe – if the trust is owed money, as trustee you may need to recover the debt;
• Holding a formal meeting once a year where you review trust investments with a regulated financial adviser;
• Keeping detailed records which demonstrate that you have managed the trust properly – the beneficiaries of the trust normally have the right to inspect these records;
• Storing all trust related documents, including accounts, minutes, title deeds, share certificates and other associated advice documents. The documents should be easily accessible just in case beneficiaries wish to see them;
• Registering the trust with HMRC should it hold investments or certain types of other assets.
As can be seen from what has been said the responsibilities of an executor and the duties of a trustee to look after assets placed in their care can be complex, time-consuming, and potentially onerous.
We are at hand to guide you and give other expert advice at every stage of the process including the management and investment of assets placed in your care.
The Springboard Business Centre, Mantle Lane, Coalville, Leicestershire, LE67 3DW
www.principlewills.co.uk info@principlewills.co.uk shanefox@principlewills.co.uk samhagon@principlewills.co.uk
PLEASE NOTE THE FOLLOWING
This guide is for general information and is not intended to address your personal and financial requirements and should not be deemed or treated as constituting financial advice. Nor does this guide constitute tax or legal advice and should not be relied upon as such. Tax treatment of investments and legal advice depends on the individual circumstances of each client and may be subject to change in the future. For further guidance on the matters discussed in this guide please speak to Shane Fox, who is an estate planner and administrator as well as a regulated financial adviser. Will Writing and advice on Lasting Powers of Attorney are not regulated by the Financial Conduct Authority.
Principle Wills is an appointed representative of New Leaf Will Writers Federation and as such, all of our Wills are checked and verified for accuracy as well as being backed up by a £2M indemnity insurance.
SHANE FOX
SAMANTHA HAGON