Understanding the role of executors and trustees in estate administration

Handling estate administration can be challenging, especially following the loss of a loved one.

The process and its procedures can seem overwhelming, particularly for those who have never acted as an executor and/or trustee before.

While many people are familiar with these terms, they may not fully understand the role and find themselves asking, ‘What does an executor and trustee do?’ and ‘What are my responsibilities?’.

What is an executor?

When a person creates a Will, they appoint an executor to manage their estate after their death.

An executor is a person (or persons) named in a Will to handle the estate of the deceased. Their primary role is to ensure the deceased’s wishes, as outlined in their Will, are followed.

An executor doesn’t require any professional qualifications; however, some estates can be complex, so executors are encouraged to seek professional assistance if needed. This can include legal, financial or tax advice to ensure the estate is managed correctly and in compliance with relevant laws and regulations.

What are the responsibilities of an executor?

The main duties of an executor include:

• ensuring appropriate funeral arrangements are made;
• locating the Will – a copy will normally be found with the deceased’s ‘important papers’ or with their lawyer, accountant or financial advisor;
• calling in the assets of the estate;
• protecting the assets of the estate, such as maintaining any insurance policies on any estate assets);
• identifying and paying all liabilities of the estate;
• acting in the best interests of the beneficiaries of the Will; and
• distributing the estate in accordance with the Will.

What is a trustee and what are their duties?

A trustee is someone named in a Will to manage and administer any trusts established by the Will. Alternatively, a trust can be created independent of a Will.

Usually, the trustee of any trusts created by a Will is the same person as the executor. Trustees are expected to (among other things) act in good faith, carry out their specific duties as outlined in the Will and act with honesty. While the executor’s responsibilities largely cease after they call in and distribute the net assets of the deceased’s estate, the trustee’s job continues according with the terms of the trust deed created by the Will. For example, a trustee may need to manage and properly invest funds held in the trust for the ongoing care of minor children and exercise discretion in making distributions from those funds for the children’s benefit, advancement, maintenance and education in life.

Potential issues for executors

Possible claims against the estate

If an eligible party feels they didn’t receive adequate provision for their proper maintenance, support and advancement in life under a Will, they can make a claim for adequate provision. This claim must be made within six months of probate being granted (or leave is required). Executors should be cautious about distributing the estate before this period ends, as doing so could result in personal liability if a claim is made afterward. To avoid potential issues, it’s advisable to wait until the six-month period has passed before distributing the estate.

Tax obligations

An executor is responsible for finalising the deceased’s tax returns and, if necessary, the estate’s tax returns. To ensure all tax liabilities are addressed prior to distributing the estate, it’s best to seek professional advice once the assets and liabilities have been determined.

Communication with beneficiaries

From the early stages of estate administration, all beneficiaries should be identified and informed of their entitlements under the Will. Misunderstandings can arise when beneficiaries expect immediate payment of their entitlements, which typically occurs 6 to 12 months after death. Keeping beneficiaries updated about realistic timelines for payments and other relevant matters affecting the administration of the estate can help avoid disputes.

This article was written with the assistance of Natalie Barbazza, Law Graduate