What is the difference between an executor and a trustee?
An executor is appointed by a Will to administer your estate after your death. That involves getting a grant of probate of the Will from the Supreme Court, then collecting all of your assets, paying all your and the estate’s debts, your funeral costs and the testamentary expenses. The testamentary expenses can include the costs of dealing with any claims against the estate and accountants’ fees. The executor’s role includes defending any claims brought against the estate. Those include claims for family provision. The administration can often be quite complex, particularly if you had any business to wind up or assets overseas.
Once the administration is complete, the executor hands over any assets left to specific beneficiaries, to them. Any cash gifts (legacies) are paid. The rest of the estate is paid or transferred to the beneficiaries who are entitled to it.
Strictly speaking an executor is one type of trustee – but the executor’s role is a very limited one.
Often a gift or share of the estate is transferred to a trustee, instead of directly to a beneficiary.
The trustee may need to hold what it received in trust for a long time. If any beneficiary is under the age of 18 years, any share left for that beneficiary must be held in trust until at least the date when the beneficiary turns 18. In many trusts created by a Will there are conditions, such as one requiring a beneficiary to be much older than 18 before becoming entitled to his/her share.
Some trusts last for many years, although the maximum period in NSW is 80 years from the date of the death of the person whose Will it is.
Some trusts are set up for charitable purposes.
While the trust is in existence the trustee has positive duties about investing funds. In many trusts they are given flexible powers.