Appointing an Executor of Your Will and Trustee of Your Estate
An executor is the person you appoint in your Will to administer your estate after you die. They are also known as your “legal personal representative”, and their role converts to the trustee of your estate, particularly if any of your estate is to be held for a beneficiary.
It is very important who you appoint to manage your estate, as their responsibilities and obligations and how they carry those out will determine how well your estate is managed, and how much of their inheritance your beneficiaries end up with.
Duties of Executors and Trustees
The main duties of your executor are:
- Make your funeral arrangements
- Identify and collect all your assets
- Protect your assets (eg. insure them)
- Attend to legal formalities
- Arrange and prepare income tax returns
- Deal with any claims against your estate
- Pay all your debts
- Distribute your estate to your beneficiaries in accordance with your Will, and
- Where trusts are established in your Will, continue the management and administration of those trusts.
Powers of Executors and Trustees
Some powers are given to the executor or trustee under State legislation. Other powers must be given by the Will. These powers can all be modified in the Will to reflect your wishes. Some key powers that need to be thought about include:
- Investment powers – what assets would you want your trustee to be able to sell and invest in?
- Powers to advance money to minor beneficiaries – it is often important to people making their Will that their children’s education is paid for out of their inheritance if they are minors. Do you want this to happen, and do you have any conditions to place on this?
- Lending – do you want to give your trustee the power to lend money to beneficiaries?
- Use of estate property – is it possible for beneficiaries to make use of assets owned by the estate, such as a holiday home?
Who should you appoint as your Executor?
There are three main groups of people that you could choose your executor from:
- family and friends,
- professionals (eg. lawyers and accountants), and
- trustee companies.
When thinking about who you should appoint as your executor, you should consider your family circumstances (eg. do you have a blended family?), the relationships in your family, who you trust most, along with the following:
- Will they charge my estate a fee or commission to act as my executor (even family and friends are able to claim a commission)?
- Do they have the time to administer my estate (it can be time-consuming and quite burdensome)?
- Do they have the business acumen to discharge the duties of an executor and trustee?
- Are they likely to outlive you (sometimes appointing someone in the generation above you is not the best choice)?
- Are they an Australian resident who lives in the same jurisdiction (State) as the bulk of your assets?
- If you appoint only one person as your executor, then you should consider appointing a substitute executor in case your initial executor predeceases you or cannot act for another reason,
- You cannot appoint more than four people as your executor, and
- If you have young children, you should consider making sure that the guardian for your children is not also the trustee of their inheritance.
The more complex your personal and financial circumstances are, the more appropriate it may be for you to consider the appointment of a professional or a trustee company.
This article is written by Jacqui Brauman and was first published on the TBA Law website
This article does not constitute legal advice or a legal opinion on any matter discussed and, accordingly, it should not be relied upon. It should not be regarded as a comprehensive statement of the law and practice in this area. If you require any advice or information, please speak to practising lawyer in your jurisdiction. No individual who is a member, partner, shareholder or consultant of, in or to any constituent part of Legally Yours Pty Ltd accepts or assumes responsibility, or has any liability, to any person in respect of this article.