Learning Outcomes
After reading this article, you will be able to distinguish between personal representatives and trustees in estate administration, explain how they are appointed under wills and intestacy, and outline their main legal duties and powers. You will understand the fiduciary obligations, statutory responsibilities, and practical considerations relevant to estate administration, enabling you to answer SQE1-style questions on this topic.
SQE1 Syllabus
For SQE1, you are required to understand the legal roles and duties of personal representatives and trustees in the administration of estates, both under wills and on intestacy. In your revision, focus on:
- the distinction between personal representatives (executors and administrators) and trustees in estate administration
- how personal representatives and trustees are appointed under wills and intestacy rules
- the main fiduciary duties and statutory powers of trustees
- the statutory framework governing estate administration (including the Trustee Act 2000 and Administration of Estates Act 1925)
- the practical steps and legal considerations in collecting, managing, and distributing estate assets
Test Your Knowledge
Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision.
- What is the difference between a personal representative and a trustee in the context of estate administration?
- Who is entitled to act as an administrator when someone dies intestate?
- Name two core fiduciary duties of trustees in estate administration.
- What statutory powers do trustees have when managing trust assets arising from a will?
Introduction
When a person dies, their property must be collected, managed, and distributed according to the law. This process is known as estate administration. The law distinguishes between personal representatives—who are responsible for administering the estate—and trustees, who may be appointed to manage assets held on trust for beneficiaries. Understanding the appointment, powers, and duties of these roles is essential for SQE1.
Personal Representatives: Executors and Administrators
Personal representatives (PRs) are the individuals legally responsible for administering a deceased person’s estate. There are two types:
Key Term: personal representative
A person responsible for administering a deceased’s estate, either as an executor (appointed by will) or as an administrator (appointed under intestacy rules).
- Executors are named in a valid will and derive their authority from the will itself.
- Administrators are appointed by the court when there is no valid will or no executor able or willing to act.
Key Term: executor
A person appointed by a will to carry out the testator’s instructions and administer the estate.Key Term: administrator
A person appointed by the court to administer the estate where there is no valid will or no executor able or willing to act.
Appointment and Authority
Executors are chosen by the testator in their will. If the will is valid, the executor’s authority arises immediately on death, but in practice, they will need a grant of probate to prove their authority to third parties (such as banks or the Land Registry).
Administrators are appointed according to a statutory order of priority set out in the Non-Contentious Probate Rules 1987. The surviving spouse or civil partner has first priority, followed by children, parents, siblings, and more distant relatives.
Main Duties of Personal Representatives
Personal representatives must:
- Collect and secure assets: Identify, locate, and safeguard all estate property.
- Pay debts and liabilities: Settle outstanding debts, taxes, and expenses.
- Distribute the estate: Transfer the remaining assets to beneficiaries under the will or, if intestate, according to the statutory rules.
- Act with care and good faith: PRs owe a duty to act honestly, impartially, and in the best interests of all beneficiaries.
Key Term: grant of representation
The court document (grant of probate or letters of administration) confirming the PR’s authority to deal with the estate.
Practical Note
PRs are personally liable if they fail to pay debts or distribute the estate incorrectly. They may protect themselves by advertising for creditors and waiting the statutory period before distributing assets.
Trustees in Estate Administration
A trustee is a person who holds and manages property on behalf of beneficiaries, according to the terms of a trust. Trusts may arise under a will (will trusts) or by operation of law on intestacy, especially where beneficiaries are minors.
Key Term: trustee
A person who holds and manages property on trust for beneficiaries, subject to fiduciary duties and statutory powers.
When Do Trustees Arise?
- Under a will, the testator may create a trust (e.g., for minor children or to provide a life interest for a spouse).
- On intestacy, statutory trusts arise for minor beneficiaries or where the estate is not distributed outright.
Appointment of Trustees
Trustees are usually appointed by the will. If not, or if a trustee is unable or unwilling to act, the court or the continuing trustees may appoint a replacement under the Trustee Act 1925.
Core Duties of Trustees
Trustees are subject to strict fiduciary duties:
Key Term: fiduciary duty
The obligation to act honestly, in good faith, and solely in the interests of the beneficiaries, avoiding conflicts of interest and not profiting from the trust.
- Duty of care: Trustees must act with reasonable care and skill, applying a higher standard if they are professionals.
- Duty of loyalty: Trustees must not place themselves in a position of conflict or profit from their role unless expressly authorised.
- Duty to invest: Trustees must invest trust assets prudently, considering suitability and diversification (Trustee Act 2000).
- Duty to keep accounts and provide information: Trustees must keep accurate records and provide information to beneficiaries on request.
Key Term: statutory trust
A trust imposed by law, such as on intestacy, where assets are held for beneficiaries (often minors) until they become absolutely entitled.
Statutory Powers of Trustees
Trustees have wide statutory powers under the Trustee Act 2000 and the Administration of Estates Act 1925, unless limited by the trust instrument or will. These include:
- Power to sell, lease, or mortgage trust property
- Power to invest trust funds, subject to the standard investment criteria
- Power to delegate certain functions (with appropriate safeguards)
- Power to insure trust assets
Trustees must review investments regularly and seek proper advice where appropriate.
Worked Example 1.1
A will leaves the residue of an estate on trust for the testator’s children until they reach 21. The will appoints two executors, who are also named as trustees. What are their roles?
Answer: The executors act as personal representatives to collect and administer the estate. Once debts are paid and the estate is ready for distribution, they hold the residue as trustees for the children until they reach 21, managing the assets and investing them prudently.
Worked Example 1.2
A person dies intestate, survived by a spouse and two minor children. Who is entitled to act as administrator, and what happens to the children’s shares?
Answer: The spouse has first priority to act as administrator. The children’s shares are held on statutory trust until they reach 18 or marry earlier, with the administrator (and any appointed trustees) managing the funds as trustees.
Exam Warning
If a trustee acts in breach of trust (e.g., invests recklessly or fails to act impartially), they may be personally liable to compensate the beneficiaries for any loss.
Trustees’ Duties in Practice
Trustees must act promptly to protect trust assets, avoid conflicts of interest, and not profit from their position unless expressly permitted. They must consult beneficiaries where required and act impartially between different classes of beneficiaries (e.g., life tenants and remaindermen).
Trustees must also comply with statutory requirements, such as registering trusts where required and keeping up-to-date records.
Worked Example 1.3
A trustee is also a beneficiary of a trust. Can they participate in decisions affecting their own interest?
Answer: Yes, but they must act in good faith and not put their own interests above those of other beneficiaries. If a conflict arises, they should consider recusing themselves or seeking court guidance.
Trustees and Statutory Trusts on Intestacy
When a person dies intestate and leaves minor beneficiaries, the law imposes a statutory trust. The administrator (and any appointed trustees) must hold the relevant share for the minor until they reach 18 or marry earlier, managing the assets as trustees.
Trustees of statutory trusts have the same fiduciary duties and statutory powers as trustees of will trusts.
Practical Considerations in Estate Administration
Both personal representatives and trustees must:
- Identify and secure all estate assets, including digital and overseas assets.
- Pay debts and taxes before distributing assets.
- Keep clear records and provide information to beneficiaries.
- Act impartially and avoid conflicts of interest.
If disputes arise, trustees should seek to resolve them by communication or, if necessary, by applying to the court for directions.
Revision Tip
When revising, focus on the statutory framework (Trustee Act 2000, Administration of Estates Act 1925), the distinction between PRs and trustees, and the main fiduciary duties.
Key Point Checklist
This article has covered the following key knowledge points:
- Personal representatives are executors (appointed by will) or administrators (appointed on intestacy) responsible for estate administration.
- Trustees manage assets held on trust for beneficiaries, either under a will or by statutory trust on intestacy.
- Executors derive authority from the will; administrators are appointed by the court according to a statutory order of priority.
- Trustees owe strict fiduciary duties: duty of care, duty of loyalty, duty to invest prudently, and duty to keep accounts.
- Trustees have statutory powers under the Trustee Act 2000 and Administration of Estates Act 1925, unless limited by the trust instrument.
- On intestacy, statutory trusts arise for minor beneficiaries, with administrators (and any appointed trustees) managing those shares as trustees.
- Both PRs and trustees must act honestly, impartially, and in the best interests of all beneficiaries.
Key Terms and Concepts
- personal representative
- executor
- administrator
- grant of representation
- trustee
- fiduciary duty
- statutory trust