If you have read a will, you may have noticed that there is a person (or people) appointed as the “executor and trustee” of the will. This is the person who applies for probate of the estate.
In modern will drafting, it is rarely the case that a different person is appointed executor to the person who is appointed the trustee; they are almost always the same person (or people) with two titles, which seems unnecessary to say the least.
You might also notice that it is confusing to call someone a “trustee” of a will when most of the time when we talk about a “trustee” in terms of people’s personal assets we are talking about a trustee of a family trust. That confusion holds the answer and another interesting journey through the history of estate administration and probate practice.
The role of trustee
The basic definition of what it is to be a trustee is to be someone who holds assets on behalf of someone else (and there are specific rules and expectations on that person and on how they treat the assets).
Accordingly, you can see the similarity between a trustee of a will and a trustee of a family trust. They are both the legal owners of certain assets (i.e. the estate’s assets or the trust’s assets), but they are not the owners in the sense that they can use those assets for whatever they want; they are holding those assets for the benefit of others (i.e. the people who are due the inheritance from the estate or the people who are entitled to benefit from the assets of the trust).
In fact, the reason that the “trustee” name is the same is that the second part of estate administration (the part where the estate funds are all gathered together and held for a time) is a type of trust. It is a much simpler form of trust than a family trust in that its terms spelling out what the trustees can and cannot do (other than the laws governing trustees in general) are contained in the will (which is usually only 2-3 pages long). In contrast, a family trust’s terms are contained in a trust deed which is often 10-30 pages long, but it is at heart a trust nonetheless.
Sometimes the trust in a will lasts for a very short time while the estate is sorted and paid out (6 months to a year) and sometimes it lasts much longer. If, for example, some of the beneficiaries are young children and the will stipulates that their inheritances must be held for them until they turn a certain age or if the will grants an interest in an asset (such as the family home) to one of the beneficiaries until that person dies, this type of trust can last for decades.
The role of executor
There is more to an estate than just holding money, however. Many jobs are peculiar to a situation where someone has died such as arranging their funeral, finding out what all their assets actually are, making sure those assets are safe and secure and selling or taking control of those assets.
These are the jobs of the first part of estate administration, and they are the jobs of the special role called “executor”.
The executor’s role has always been important, but especially so in earlier times where the framework of government and asset-holding organisations was not as seamless as it is now. As our system of probate and estate administration comes almost entirely from England, I am referring back to England as it was, say, 150 plus years ago.
As an example, there needed to be someone whose job it was to make sure the deceased was buried. You can imagine a situation (perhaps in a novel by Dickens) where a deceased person has an extravagant wish for their burial which their assets at death cannot afford or where their family cannot agree on where to bury them (in fact, this fact scenario does not require going back as far as Dickens – it was played out in recent times in New Zealand in the well-known case of Takamore v Clarke in 2012).
This was clearly enough of a problem to be a concern to the government (and a public health hazard) because there is a rule of estate administration which says that no matter what the deceased’s wishes were or what the deceased’s family’s intentions are, it is up to the executor to decide on how and where to dispose of the deceased person’s body. This ensures that lengthy battles of families or unrealistic expectations of the deceased cannot lead to a person remaining unburied (or nowadays cremated) for very long because the executor can take control and do what is practical.
The relationship between the executor and trustee roles
Historically, two separate people were sometimes appointed in these two roles, but that has long fallen out of common practice.
Most people use the terms executor and trustee interchangeably now, and in modern estate administration, there isn’t usually much call to do otherwise. As they are the same people, why bother?
However, it is worth knowing the difference for two main reasons.
Firstly, different rules apply to the behaviour of an executor to that of a trustee, and many special rules apply only to executors. Usually, the roles occur one after the other: executor first followed by trustee, but sometimes someone can be acting as both on different tasks at the same time. While the rules rarely clash with each other, they are quite distinct.
Secondly, knowing the difference and why there is a difference makes the realm of estate administration and probate practice with its diverse and archaic terms more approachable and less frustrating for those who are unlucky enough to enter its gates unexpectedly.
For more information
If you are struggling through the mire of estate administration terms, our probate expert Jenny Lowe is here to help. Jenny is one of few legal specialists in New Zealand for probate and letters of administration applications, covering both the simple and the complex. She is particularly skilled in applications where the deceased lived and died overseas, but the estate has assets in New Zealand. Please contact Jenny Lowe on 04 916 0153 or email firstname.lastname@example.org.