What’s the Difference between an Executor and a Trustee?
An Executor is a person chosen by someone writing a Will to be in charge of making sure their wishes are followed after they die. A Trustee is someone who is chosen to manage a Trust (and its assets) which it’s best to set up when making a Will.
Although they may seem like similar roles, they have different responsibilities.
When you’re thinking of making a Will, it’s important you understand the role of an Executor and a Trustee and the difference between them. Let’s look at each role separately.
What Does an Executor Do?
An Executor’s role is to manage what happens to all of the assets in the Estate and also to execute the Will.
An Executor’s main responsibilities include:
- Registering the death and arranging the funeral (if a family member can’t do this or the Executor is a family member)
- Applying for a Grant of Probate if needed
- Informing organisations about the death, such as banks, insurance and utility companies, any benefits agencies, among others
- Collecting any money owed to the Estate
- Calculating the value of the Estate
- Calculating any Inheritance Tax, Capital Gains Tax or Income Tax payable, filling in the correct tax forms and paying taxes to HMRC
- Paying any other debts, bills or expenses
- Preparing Estate accounts (Executor can be held liable for any mistakes)
- Finding and contacting any beneficiaries of the Will
- Distributing assets to the beneficiaries as per the instructions in the Will
One of the first things the Executor needs to do is to estimate the value of the Estate. If the Estate is worth less than £5,000 they may not need to apply for a Grant of Probate. Be aware that some financial institutions ask for a Grant of Probate for amounts less than £5,000 – it really does depend on their individual policies.
The administration of an Estate can take anywhere between 6-12 months to complete, sometimes even longer. Being an Executor is a big responsibility to take on, so you should consider carefully who you think will be in the best position to undertake this work for you after you’re gone.
What Does a Trustee Do?
A Trustee manages money or assets that are protected by a Trust. A Trust can be created as a part of a Will to protect certain assets. It’s common for the person who sets up the Trust to set rules for Trustees to follow after they die. An example of this could be that the money or assets in the Trust can only to be used to pay for school fees. This is a clear instruction that the Trustees have to follow.
The main responsibilities of a Trustee include:
- Keeping detailed records, accounts and receipts of everything they do relating to the Trust
- Saving all Trust related documents including accounts, deeds, certificates and any other relevant documents
- Reviewing the Trust investments on an annual basis
- Acting fairly and responsibly towards any beneficiaries and always acting in their best interests
The duties of a Trustee will be affected by what kind of Trust they’re in charge of. For details about different kinds of Trusts, see What Types of Trusts are Available?
Can an Executor Also be a Trustee?
Yes - you can choose the same person to be your Executor and your Trustee. But make sure they are someone that you trust. It’s always best to speak to the person you choose before you name them in a Will or Trust, so that they understand the individual responsibilities of each role. It also gives them the chance to say that they don’t want to take on the role before you name them in your Will.
How Can Simpson Millar Help You?
Choosing who will take charge of your Estate after you die is a big decision. It’s important that you have all the information you need before you make that decision.
We can’t help you to choose your Executors or Trustees, but we can guide you through the process of writing a Will or setting up a Trust. We can give you advice on the sort of people you should use and if you’re not sure, we can act as a professional Executor or Trustee for you.
Make sure you plan for your future well. The Inheritance Tax threshold in England and Wales is currently £325,000 so if everything you own (called your Estate after you die) is worth more than this, Inheritance Tax will be payable on your Estate.
The Inheritance Tax rate is currently 40% but this can be reduced to 36% by gifting 10% of your Estate to charity. For more information see Inheritance Tax Planning or request a call by using the form below.
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