All of us should have a Will. Having a Will ensures that our wishes regarding our property and how that property is treated after our death is clearly set out for our loved ones. A key part of making a Will is to consider who to appoint as our personal representative in our Will. Under the Wills Act 2007 ‘personal representative’ means administrator, executor or trustee. In this article the roles of executor and trustee will be outlined.
The executor’s role can be understood as the initial manager of the affairs of the deceased. The executor has a duty to ensure the wishes of the will-maker are carried out. These duties also include an obligation to attend to funeral arrangements and payment, identify the estate property, ensure debts are paid, apply for probate of the estate, and ensure specific gifts are made. The duties of the executor are owed to the estate and to the beneficiaries, and are fiduciary in nature. The executor owes duties of utmost good faith and loyalty, and to act in a timely way in administering the estate.
Consequences of breaching the executor’s duties could be that the beneficiaries of the Will take action in the High Court for breaches of fiduciary duty, or apply to remove the person as executor.
The role of trustee is to administer any Trusts arising from the Will. Not all Wills will create Trusts, but where a bequest creates a Trust, the trustee is obliged to discharge their duties in acting as trustee under a Will. These duties are imposed by various pieces of legislation, including the Trustee Act 1956. The duties are owed to the beneficiaries of the Trust, in other words those that stand to benefit from the Trusts created under the Will. The duties are onerous and far reaching and include the duty to comply with the terms of the Trust, to invest prudently and in the best interests of the beneficiaries, to keep complete and careful records and to report and provide information to the beneficiaries and to treat all beneficiaries of the Trust fairly.
The beneficiaries of the Trust are entitled to rely on the trustees and that the trustees are discharging their duties. The consequences of a trustee breaching their duties could result in the beneficiaries applying to the court for various remedies, including that the trustee be removed from the Trust. If the trustee’s breach of duty results in a financial loss then the court may make punitive awards against the trustee.
It is imperative that an executor and trustee understand their roles and the difference between them, the duties that arise from the roles, and the consequences that could arise from breaching those duties. It is always wise to seek advice to ensure that one’s obligations are met.