GUIDE

What is the difference between a beneficiary, executor and trustee?

When someone writes a Will, they are instructed to name an executor to administer their estate and beneficiaries to inherit their assets. They may also appoint a trustee if necessary. It is possible for one person to be named as both an executor and a trustee, or even as all three. This article will explain what these three roles entail.

For free initial advice call our advisors or request a callback and we will contact you.

Your guide to Probate

Part 1

What is a beneficiary?

A beneficiary is someone who receives an inheritance from someone’s estate after their death. Beneficiaries are divided into three different categories based on what kind of gift they are entitled to receive: specific gifts, pecuniary gifts, or residuary gifts. Based on this distinction, the beneficiaries are entitled to different information during the probate process and might have slightly different roles. Overall, there is little that a beneficiary needs to do during probate.

Specific Gifts

Beneficiaries of specific gifts are those who are due to inherit a specific item such as a vehicle or shares in a company. If the gift is physical, the executor should hand it over almost immediately after probate has started. The beneficiary of a specific gift has no responsibilities during probate but should communicate with the executor until they have received their inheritance.

Pecuniary Gifts

Pecuniary beneficiaries are those who are due to receive a specific sum of money from the estate. These beneficiaries will need to wait until a grant of probate has been obtained and all liabilities settled by the executor before their money can be released to them. Again, pecuniary beneficiaries should continuously communicate with the executor until their inheritance has been released to them. In some cases, the estate will have significant liabilities that subtract from the pecuniary gifts, but the beneficiaries should be made aware of this by the executor.

Residuary Gifts

Residuary beneficiaries inherit what is left of an estate when probate is complete. These beneficiaries must wait the longest to receive their inheritance because all liabilities and pecuniary gifts must be paid out first.

Residuary beneficiaries have the most significant role in the probate process of any beneficiary because their inheritance is the most likely to be impacted by probate expenses and liabilities. For this reason, it is up to the residuary beneficiaries to hold the executor to account throughout the probate process. The executor should keep and update the Estate Accounts; these are documents that track all money coming into and flowing out of the estate, for example, rental income and debts that need to be paid. The executor should also keep track of all expenses that they are charging back to the estate during probate, such as travel costs and legal expenses.

If the residuary beneficiaries feel that the executor is making unreasonable charges to the estate or has made a significant mistake in their calculations that might directly impact the amount of money that they are due to inherit, they are entitled to take legal action and hold the executor personally financially liable. Residuary beneficiaries are not required to take any part in the probate process, but it is recommended that they read through the Will carefully and keep an eye on the Estate Accounts throughout.

What is a beneficiary

Part 2

What is an executor?

The executor of an estate is responsible for handling the estate administration. Often, this means applying for a grant of probate and distributing the assets to the beneficiaries named in the Will. However, this role is often a lot more complex than that.

There are a huge number of tasks that must be undertaken by the executor, particularly in the case of complex or large estates. These responsibilities might include:

  • Notifying multiple organisations of the death (this includes several governmental organisations which can be notified using the government’s ‘Tell Us Once’ service).
  • Locating the Will and ensuring that it is not tampered with.
  • Getting in touch with relevant financial institutions such as banks to let them know of the death and ask them to value and freeze the deceased’s assets.
  • Having any property valued, preferably with a RICS qualified surveyor or estate agent.
  • Calculating the net value of the estate, including all assets and liabilities.
  • Paying off all liabilities such as Inheritance Tax, Capital Gains Tax, utility bills, and more.
  • Filling out complex legal forms and applying for a grant of probate.
  • Selling any property or transferring ownership to the beneficiaries.
  • Accessing pension funds.
  • Closing any bank accounts and savings accounts and collecting the funds together.
  • Claiming on life insurance policies.
  • Distributing gifts, assets, and funds to the beneficiaries of the Will.

Probate is an extraordinarily lengthy and complex process for the executor, who has the most involved role by far. The probate application itself can take two to three months to be approved and sent to you in the post. Dealing with the estate once a grant of probate has been obtained can take anywhere from three to nine months to complete, or even longer for more complex estates.

Many people choose to hire a professional to help with probate. This won’t always make the process quicker, but it will ensure that no mistakes are made, and it is useful for those who don’t have a lot of free time to complete these tasks.

At Kwil, we offer a grant-only service, whereby we will acquire your grant of probate for you then leave you to administer the estate in your own time, or a full estate administration service, in which we acquire the grant of probate and handle every task that comes after that. These are both fixed fee services with no hidden costs, and the payment can be charged back to the estate so that you are not paying out of pocket.

What is an executor

Part 3

What is a trustee?

Trustees are not always required; they will only be named if there is a Trust included in the Will. The role of the trustees is to protect the assets included in the Trust for the sake of the beneficiaries who are due to inherit them. A Trust is a legal structure that puts certain assets under protection until the beneficiaries can inherit them.

For example, a Trust may be written into the Will for a minor. This means that the deceased is leaving an inheritance to someone who is under the age of 18 and cannot legally inherit yet. In this case, the trustee is responsible for protecting this inheritance until the beneficiary turns 18, at which point the trustee should transfer the inheritance to them.

There are several different types of Trust, but the role of the trustees is more or less the same regardless. The main responsibilities of the trustees are to locate the assets included in the Trust and protect them, review any investments included in the Trust at least once a year and seek financial guidance if necessary, keep records on how the Trust is being managed for the benefit of the beneficiaries, and store all relevant documentation regarding the Trust in a safe place.

The trustees have a responsibility, like the executor, to act in the best interests of the beneficiaries. If the beneficiaries feel that the trustees are abusing their position, making errors or simply not doing their job correctly, they are entitled to hold them personally financially liable. Therefore, it is often recommended that trustees seek financial advice before they take on the role.

What is a trustee

For free initial advice call our advisors or request a callback and we will contact you.