If you want to ensure that your loved ones receive your assets when you pass away, you may need to appoint either a trustee or an executor. In order to help you plan effectively, Prestige Tax and Trust Services asks: what is the difference between a trustee and an executor?
An executor is the administrator of your will. Their primary task is to ensure that your estate is handled according to your wishes, in line with British law. The duties of an executor range from valuing your estate for inheritance tax purposes and paying said tax to HM Revenue & Customs (HMRC), to ensuring your debts are paid, applying for probate and distributing your assets, according to your will.
In contrast, a trustee is the administrator of a trust. As the trust’s creator (settlor), you give the trustee legal ownership of the assets placed in this vehicle, which they manage for the benefit of its beneficiaries. The duties of a trustee, who is bound to act in the beneficiaries’ best interests and with reasonable care, include managing trust property and paying any applicable revenue to beneficiaries.
Both trustees and executors serve as managers, but they administer different legal vehicles, so they hold different obligations under UK law. It is important to note that you can set up trusts either while you are alive or in your will, helping you avoid inheritance tax. In the latter case, you may want to appoint your executor to also serve as your trustee, so they can administer this ‘will trust’ effectively.
If you die before your children reach age 18, any assets you leave to them will automatically be placed in a trust. In this case, the executor will become a trustee anyway, so it is crucial that if you have children, you appoint an executor who could, if the need arises, also serve as their trustee. We would recommend, however, that you refrain from making the same person both your child’s trustee and guardian, so that the former can handle the trust’s assets objectively, as is required by UK law.
Prestige Tax and Trust Services
When you appoint an executor or a trustee, you place serious responsibilities on their shoulders. You may want ensure your will/trust deed is detailed and legally sound, so that your chosen administrator can handle their responsibilities. As legal experts, Prestige Tax and Trust Services can help you write the will/trust deed you need to ensure your loved ones are provided for after you die.