What is the role of an executor and a Trustee?

What is the difference between an executor and a Trustee?

Executors and Trustees both play vital roles in managing a deceased person’s estate, but they have distinct responsibilities, depending on the structure of the Will and any Trusts involved.

An executor is the person named in a Will to carry out the deceased’s wishes and manage their estate. Key duties include:

• Applying for probate (if needed)
• Identifying and valuing assets and liabilities
• Paying debts and taxes, including Inheritance Tax
• Distributing the estate to beneficiaries as outlined in the Will
• Keeping records of all transactions and decisions
• Executors act temporarily – their role ends once the estate is fully administered.

A Trustee is responsible for managing any Trusts created by the Will or separately. Their role can be long-term, especially if the Trust is ongoing – for example where the beneficiaries are children or vulnerable individuals. Key duties include:

• Managing Trust assets (e.g., investments, property)
• Making decisions in the best interest of the beneficiaries
• Distributing income or capital according to the Trust terms
• Complying with legal and tax obligations
• Keeping records for transparency and accountability

Trustees must act with care, loyalty and impartiality, often for many years. While an executor’s role finishes once they’ve distributed the assets and sold the house and it’s all completed, a Trustee’s role can go on for 125 years, as this is the potential lifetime of a Trust.

What legal responsibilities does an executor have during probate?

It includes managing the deceased’s estate, settling debts and taxes, and distributing assets to beneficiaries according to the Will. They are legally obliged to act with honesty, diligence, and in the best interests of the estate.

Core legal duties of an executor in the UK
Executors are legally accountable for administering the estate from the date of death until final distribution. Their responsibilities include:

1. Applying for probate: Submit the Will and relevant forms to the Probate Registry. Obtain the Grant of Probate, which gives legal authority to manage the estate.
2. Identifying and valuing assets: Locate all assets: property, bank accounts, investments, personal belongings. Obtain professional valuations where necessary.
3. Settling debts and taxes: Pay outstanding debts, including mortgages, loans and utility bills. Calculate and pay Inheritance Tax (IHT) and any Income Tax or Capital Gains Tax due during the administration period.
4. Maintain accurate records: Keep detailed accounts of all transactions, including receipts, payments, and correspondence. Prepare estate accounts for beneficiaries if requested.
5. Distribute the estate: Transfer assets to beneficiaries as outlined in the Will. Ensure all legal and financial obligations are met before distribution.
6. Communicate with beneficiaries: Keep beneficiaries informed of progress and decisions. Resolve disputes or delays transparently and fairly.

What duties does a Trustee have after the estate has been distributed?

Once the executor has completed probate and distributed the estate, the Trustee steps into a long-term role if the Will or estate created a Trust. Their legal and fiduciary duties include:

1. Administering the Trust according to its terms: Follow the instructions set out in the Trust deed or Will. Ensure distributions, investments, and decisions align with the Trust’s purpose.
2. Acting in the best interests of beneficiaries: Maintain impartiality between different classes of beneficiaries (e.g. income vs capital). Avoid conflicts of interest and act with loyalty and integrity.
3. Manage Trust assets responsibly: Invest prudently and diversify assets where appropriate. Keep Trust property secure and productive.
4. Maintain accurate records and accounts: Track income, expenses and distributions. Prepare annual accounts and provide updates to beneficiaries if required.
5. Comply with legal and tax obligations: File Trust tax returns and pay any Income Tax or Capital Gains Tax due. Stay compliant with the Trustee Act 2000 and other relevant legislation.
6. Communicate with beneficiaries: Provide information about the Trust’s performance and decisions. Address concerns or disputes transparently.

Often Trusts give the Trustees the ability to lend money to the beneficiaries. If you lend all the money out to the beneficiaries within two years of the death, and don’t charge them any interest, you might be able to avoid the onerous burden of having to do Trust accounts for a while.

How long do executor and Trustee responsibilities usually last?

Up to 125 years – until the Trust is disbanded or comes to an end.

What personal liability do executors and Trustees face if mistakes are made?

The executors are legally responsible for administering the estate correctly, so they can be held personally liable for various things, including:

• Failing to pay debts or taxes before distributing assets
• Misinterpreting the Will or ignoring its instructions
• Delays without justification, causing financial loss
• Mismanaging estate assets, such as selling property below market value
• Acting in their own interest or favouring certain beneficiaries

Even lay executors such as family members are expected to exercise reasonable care and skill. Professional executors like solicitors are held to a higher standard.

Trustees have long-term fiduciary duties and can be personally liable for:

• Breaching the terms of the Trust
• Failing to act impartially between beneficiaries
• Poor investment decisions or failure to diversify assets
• Not keeping proper records or accounts
• Delaying distributions or withholding information

Trustees must act prudently and loyally. If they cause loss to the Trust, they may be required to compensate beneficiaries from their own assets.

Can an executor also act as a Trustee or should these roles be separate people?

It’s common for people to be both executor and Trustee, especially in family situations. The roles require different mindsets, however. One’s about winding up affairs and the other about ongoing stewardship.

If you’ve appointed a professional, you won’t want them to be involved on an ongoing basis. They might retire as a Trustee once the probate process has been completed.

What records or accounts must be kept by executors and Trustees?

Executors and Trustees are responsible for administering the estate or the Trust and should keep records.

Executors are responsible for administering the estate and must maintain:

• Asset valuations: Property, bank accounts, investments, and personal belongings at date of death.
• Liabilities and debts: Mortgage statements, bills, and creditor correspondence.
• Tax documents: Inheritance Tax forms (e.g. IHT400), income tax returns, and HMRC correspondence.
• Bank statements: For estate accounts showing income, expenses, and distributions.
• Receipts and invoices: Funeral costs, legal fees, property maintenance, etc.
• Estate accounts: A summary of all transactions, showing how the estate was distributed.

These records help demonstrate that the executor acted properly and can be requested by beneficiaries or HMRC. It’s recommended to retain them for at least 6 years after the estate is settled.

Trustees manage Trust assets over time and must maintain:

• Trust deed and amendments
• Asset records: Property deeds, investment statements, and purchase/sale documents.
• Income and expenditure logs: Rent, dividends, interest, and discretionary payments to beneficiaries.
• Tax filings: Trust tax returns and correspondence with HMRC.
• Decision records: Minutes of Trustee meetings, rationale for discretionary payments, and investment choices.
• Beneficiary communications: Letters, updates, and requests.

Trustees should ideally retain records for the full duration of the Trust, especially if disputes arise later.