TRUSTEES, EXECUTORS AND GUARDIANS
We are sure you would prefer to choose who manages and controls your estate at your death.
Three important roles in Wills and Estate Planning
These terms may or may not be familiar but it is important to understand the nature of each role and how they play their part in your Will.
There is a clear overlap between the role of an Executor and the role of a Trustee, hence these two roles tend to be carried out by the same people. Always ensure that you and your Executors know where your original Will is kept.
Executors are appointed to manage the process of administering your Will at death but can delegate some or all of the work before they start. Executors can (and many do) seek professional assistance in this role. Hamilton Legacy can either assist you or put you in touch with experts who will be able to help you.
A Trustee role should not be taken lightly and whoever you choose needs to be trusted to act in the best interests of beneficiaries. Trustees are under a statutory duty of care (Trustee Act 2000) and must understand the terms of the Trust.
Decisions taken by Trustees must be unanimous. If a Trust is to benefit a number of beneficiaries equally, the Trustees must not favour one beneficiary and are advised to seek professional advice when making investments.
EXECUTOR & TRUSTEE ROLES EXPLAINED
AN EXECUTOR’S ROLE
- Register the death at the local registry office and arrange the funeral including checking for any funeral plan.
- Inform all relevant organisations of a death such as employer, utility companies, banks etc.
- Draw up a list of debts that must be paid by the estate and open a personal representative’s bank account – for money paid into and out of the estate as this must not be mixed with your own assets.
- Prepare the Inheritance Tax return (if appropriate) and apply for a Grant of Probate – once the Grant is obtained, this will give you legal authority over the estate.
- Pay all legacies in the Will and set up any Will Trusts, which may require a legal professional to set up any Declarations of Trust.
- Transfer all assets into the Trustees’ names and set up a Trustee bank account or a Deed of Appointment if a Trust is disbanded.
- Complete Income Tax returns for each beneficiary and estate income if the estate has accrued any income during the Probate phase. Then compile estate accounts showing assets and liabilities.
A TRUSTEE’S ROLE
- Register the Trust assets in the Trustees’ names.
- Set up a Trustee bank account.
- Liaise with other Trustees to act in the best interests of the beneficiaries.
- Invest the Trust funds without making personal profit or causing loss to the Trust.
- Act impartially, treating all classes of beneficiaries fairly in accordance with the terms of the Trust and consider any Letter of Wishes that comes to their attention.
- Hold annual Trustees’ meetings where relevant, maintaining accurate accounts and records.
- Complete annual tax returns to HMRC on any income tax, capital gains tax and entry, exit and 10-yearly inheritance tax charges on the Trust assets.
- Trustees may delegate their duties of administration and investment to professionals if permitted by the Trust Deed, but overall responsibility remains with the Trustees.
A Guardian’s Role
A Guardian’s role is essentially the same as those of a parent and will include decisions about schooling and health as well as moral and social support and upbringing. There will be financial, social and emotional implications and these should be discussed with the parents before taking on the role.
The terms of the Will should be such that the Executors and subsequently the Trustees can do all that is necessary to provide financial help to the Guardians. While Guardians have daily responsibility for the children, it is better for the financial control to be handled by someone different, normally the Trustees of the estate.
Through the appointed Trustees of their Wills, most parents will make financial arrangements for their children if they. But Guardians may be able to claim child benefit and receive a Guardian’s allowance if both parents pass away.
This means that appointed Trustees and Guardians can share potentially difficult decisions such as provision of funds for the children’s upbringing and other costs before the youngest child becomes 18. Trustees in this event are obligated to use available estate funds to provide for the maintenance, benefit and advancement of the children.
Trustees and Guardians need to work together to resolve issues and agree reasonable expenditure of funds. And, if you have been appointed as a Guardian, you should also make a Will to safeguard further for the future of the children.
“Whatever your role, be meticulous in your record-keeping and do not mix the assets of the deceased with your own assets.”
You can choose who best fulfils each role
Katie and Harry have a good relationship with their families, but they also have a great network of close friends.
They are writing their Wills. They know they need financially sensible, prudent people to make sure their wishes are carried out, as they have been advised those Wills may require Trusts.
Katie’s brothers are wonderful, but they are really not the right people for that job, although her sister is ideal, together with Harry’s brother and another friend who they trust a great deal.
All of their siblings have children and would struggle to take on Katie and Harry’s three children. Neither Katie nor Harry are sure they would want their children to live with any of their siblings anyway. The role of Guardian means that Katie’s closest friend, Claire, would be the ideal person. Claire and her husband have similar values and ideals to Katie and Harry and they live close to them so any disruption for the children would be minimised.
Through their Wills they can nominate the Executors, Trustees and Guardians they feel are best for these roles.
What Happens Now?
“It’s never easy talking about death or how to manage your affairs should you lose your capacity, but we gently guide you through this – making sure those you love get what you want them to have.”
Feel free to contact us for an in-depth discussion about your options, our fees, the process or anything else. Just pick up the phone or send us an email. We know from previous client experience that you will be pleased you did.