In some cases the estate may continue to exist in the form of a trust, even after the administration is otherwise complete.
This can occur for a variety of reasons, for example, there may be under-age beneficiaries, or life interests to deal with and/or there may be property that the estate wishes to hold onto in the meantime.
The trustees will usually be the existing executors of the estate unless otherwise provided for in the Will. A trustee is a person appointed to hold the trust’s assets for the benefit of beneficiaries. The trustees are obliged to act honestly and in good faith for the benefit of all the beneficiaries. Trustees have legal control of the trust’s assets, hold title to the assets in their own name, and have the power (subject to the Will) to deal with those assets as they see fit.
Trustees must be:
- Over 18 years of age.
- Mentally capable.
- Aware they have personal liability for any losses that may be incurred by the trust because of their own dishonesty or negligence.
Trustees should also:
- Understand that they may be personally liable for taxes and other charges such as property rates, payable by the trust.
- Acknowledge that they may be personally liable for trust debts, or guarantees given by the trustees.
- Be trustworthy, as they must manage the trust’s affairs in a way that will provide the maximum benefits possible to the beneficiaries.
Trustees’ duties and responsibilities
Trustees have a number of legal duties and responsibilities: the Will may affect how these duties apply. It’s also important that trustees remember that they are only allowed to do those things which they have legal power to do. Again, there are some standard powers set out in law, but the Will can expand on these.
The duties and responsibilities of trustees are to:
- Know and adhere to the terms of the Will.
- Treat the beneficiaries in an even-handed manner and act in their best interests.
- Not make any profit from being a trustee, and act without being paid (except for refunds of out-of-pocket expenses) unless it’s provided for in the Will.
- Invest prudently (s13E of the Trustee Act 1956 sets out a number of factors which trustees should take into account, where appropriate, when making investment decisions).
- Not delegate any of the trustees’ responsibilities, unless permitted to do so.
- Take an active part in the trust decisions and the exercise of trustees’ discretions – trustees must not agree in advance to place a limitation or restriction on the future exercise of any discretion.
- Act unanimously (unless the Will provides that a decision of the majority of the trustees is binding).
- Where appropriate, take specialist accounting advice to ensure the estate complies with its tax obligations.
- Pay the correct beneficiaries at the correct times.
- Keep proper accounts and give information to beneficiaries as required.
The Will states who is to get what, and where and when any estate funds are to be paid. It’s the trustees’ duties to carry this out.