Wills require nominations for two types of roles: executor and trustee. Sometimes the executor is also the trustee, but this is not always the case. What is the difference between these two positions?
The executor is tasked with managing the estate within the terms of the will. Their role includes obligations such as:
locating the will
organising the funeral
applying to the Supreme Court for a grant of probate* (if necessary)
paying the debts of the deceased from the estate
collecting the assets of the estate
preparing and lodging taxation returns
distributing the estate to beneficiaries, and
defending any claims against the estate.
*Probate is a document that confirms the executor’s position, and provides them with permission to administer the estate. It depends on the value and type of assets in the estate as to whether a grant needs to be obtained.
If the will establishes a trust (or trusts), the person nominated as the trustee will need to act as trustee of those trusts. The trustee must manage the trust until it vests (“vesting” is when the trust beneficiaries become absolutely entitled to all its income and capital). The duties of the trustee will be determined by the terms of the will, and applicable legislation. In New South Wales, the Trustee Act 1925 (NSW) applies to trustees. The main duties of trustees are:
to preserve and invest trust property
to insure trust property
to act in good faith
to follow the trust deed or will
to keep accounts
to consider how best to exercise their powers, and
act impartially between beneficiaries.
A beneficiary of the estate could act as a trustee. However, a beneficiary cannot be a trustee of the estate if they are the sole beneficiary under the will. Beneficiaries may be personally liable if they breach their duties.
Choosing an executor or trustee
When preparing your will, it is important that you carefully consider who to appoint as your executor and trustee. You need to ensure that you trust them to carry out your wishes in accordance with your will. You also need to consider more practical circumstances, such as the age of the people you nominate, and whether the executor and trustee have any legal or accounting expertise.
If you need assistance with your will or estate planning, please give Jenkins Legal Services a call on 02 4929 2000 or email firstname.lastname@example.org.