What Should You Consider When Appointing Executors and Trustees?

An executor is required to administer an estate and protect estate assets for the beneficiaries.

Executors are legally obliged to act in accordance with the deceased’s wishes as set out in their will.

The most important duties of executors are:

• To collect and preserve estate assets
• Identify and pay estate debts and taxes
• Distribute the estate according to will or intestacy rules
• Exercise reasonable care and skill
• Keep estate money separate from personal funds
• Comply with statutory deadlines for tax and estate administration milestones

If an executor breaches their fiduciary duties by using the estate funds for their own personal gain, failing to progress the administration of the estate for a prolonged period without a justifiable reason for doing so or if their personal interests clash with their duties to the beneficiaries, then the court could intervene and remove the executor.  Such intervention highlights how seriously the law treats the role and responsibilities of executors.

Instead of making outright gifts in his Will, using a trust may have been more suitable for Mr Smith’s circumstances.

Trusts can be used to protect assets and ensure that they are distributed in accordance with your wishes following your death.

Trustees have a duty to act within the powers given to them within the trust provisions and the law. Trustees should therefore only act within the powers given to them. If a trustee acts outside these powers, their action may be declared void, or they may be liable to the beneficiaries for any loss resulting.

Who you appoint as trustees will depend on the circumstances and your reasons for the trust. You should consider whether the individuals will be able to act impartially whilst exercising good judgment before appointing them as trustees.

With a discretionary trust, the trustees have complete discretion to distribute income and/or capital to any potential beneficiary at any time. This discretion is often guided by a letter of wishes which provides context to your trustees.  You should therefore ensure that you can trust your trustees to act in accordance with your wishes.

A life-interest trust would provide income to the surviving spouse from the estate, or they would have use of an asset, such as the family home, until their death. When the surviving spouse dies, the remaining estate would pass to the deceased’s children from their first marriage.

In Mr Smith’s estate, a trust could have been used to protect the inheritance for his children whilst making provision for Mrs Smith during her lifetime. This would have separated the control of the assets from an individual’s right to benefit from them.

Choosing the right executors, anticipating complex family dynamics and putting protective structures in place will minimise potential conflict and ensure that your estate is administered smoothly.

Careful planning is not about distrust.

It about safeguarding assets for your loved ones and ensuring that your wishes are carried out exactly as intended – even when you are no longer there to enforce them.