When a Will is drafted, it sometimes appoints Trustees as well as Executors. The role of Executor is to administer the deceased’s Estate, but the Trustees are there to manage any ongoing Trusts which arise from the Will.
Why Are Trustees Appointed?
One reason why a Trustee (or Trustees) might be appointed is if a Beneficiary is under the age of 18. In this case the Trustee will be responsible for taking care of the Beneficiary's inheritance until they come of age.
Alternatively, Trustees may be appointed to manage a Trust that has been set up as part of a Will and holds some (or all) of the Estate. The Trust would need to be managed in line with the terms that have been set out in the Will.
It's common for the same person (or people) to be appointed as both Trustee and Executor, but not everyone fully understands why a Trustee is named in a Will or what the role entails. Below, I will explain why a Trustee might be appointed in a Will and how the Trustee works with the Executor.
What Does an Executor Do?
A Will should set out who is going to be the Executor of the Estate. This can be more than one person and, in fact, up to four people can act together in this role at any one time. The Executor is the person who is appointed to be legally responsible, after your death, to administer your Estate and carry out the terms of your Will.
Administering an Estate is a very broad role which carries a significant amount of responsibility, as well as some personal liability.
The person who acts as the Executor of your Estate will need to:
- notify organisations that you've died, like your bank or your pension provider
- value all your assets and liabilities
- calculate whether any Inheritance Tax is due
- liaise with HM Revenue & Customs and arrange payment of tax from the Estate assets
- apply for a Grant of Probate (if needed)
- pay off all other debts you have, again from the Estate assets
- deal with any challenges to the Will
- distribute what's left to the beneficiaries named in your Will
This list doesn't encompass all of the Executor's duties, but these are the key tasks that they will need to undertake.
The Executor should then ultimately receive a receipt from each beneficiary confirming that they have received payment of the amount due to them from the Estate and that the Executor is now discharged from their duty to administer the Estate.
What Does a Trustee Do?
If a Trust is established under the Will then the named Trustees become responsible for receiving the inheritance from the Estate on behalf of the Trust. The Executor will need to distribute this portion of the Estate to the named Trustees. The Trustees are then legally responsible for managing the cash or assets either on behalf of the Beneficiary or on behalf of the Trust.
The Will should set out the terms of the Trust, and the Trustees will need to carry out their role in accordance with these terms.
As well as their duty to act in accordance with the terms of the Trusts, the Trustees owe duties of honesty, integrity, loyalty, and good faith to the beneficiaries. The Trustees also have a duty to act fairly towards the beneficiaries, balancing each of their interests, along with a statutory duty of care under the Trustee Act 2000 to "exercise such care and skill as is reasonable in the circumstances."
In addition to their duties, the Trustees will have numerous powers when it comes to dealing with the Trust. These powers will be outlined within the terms of the Trust and are also defined by law.
Choosing the Right Trustee
Like the role of Executor, the role of Trustee is not something that should be entered into lightly. If Trustees need to be appointed in your Will then you should take time to carefully consider who would be the best fit for this role. Take into account the duties that will need to be carried out by whoever is appointed as Trustee and the responsibility that this role commands.
If a Trust is likely to be established in your Will then it's always best to name at least two Trustees. This serves two key purposes, firstly it's possible that any person you name as a Trustee may become unable or unwilling to act on your behalf when the time comes. So having two people appointed reduces the chances of there being no Trustee to act. The second reason is because if the Trust contains property as an "Asset of the Trust" then there is a legal requirement that at least two Trustees act to deal with the legal ownership of the property.
In the event that you only have one Trustee in place at the time of your death, then that Trustee can appoint a Co-Trustee to act alongside them to bring the number up to two. However, most people would prefer to choose their Trustees at the outset rather than relying on the sole Trustee to make the choice.
When making a Will it’s important to consider the role of Trustees. It’s also important to consider whether it is possible that a Trust could arise, based on your circumstances and how you would like your Will to be drafted. For more information please see Trust Wills.