Personal representatives and trustees in estate administration - Powers of personal representatives and trustees

Learning Outcomes

After reading this article, you will be able to identify and explain the main statutory and common law powers of personal representatives and trustees in estate administration. You will understand the legal authority for collecting assets, paying debts, investing estate or trust property, and distributing to beneficiaries. You will also be able to apply the rules on fiduciary duties, delegation, and the limits of these powers in SQE1-style scenarios.

SQE1 Syllabus

For SQE1, you are required to understand the practical powers and duties of personal representatives and trustees in estate administration. Focus your revision on:

  • the statutory sources of authority for personal representatives and trustees (including the Administration of Estates Act 1925 and Trustee Act 2000)
  • the powers to collect, manage, and distribute estate assets
  • the powers of investment and delegation available to trustees and personal representatives
  • the fiduciary duties and limits on powers, including the duty of care, impartiality, and avoidance of conflicts of interest
  • the distinction between administrative and dispositive powers, and how these are exercised in practice

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.

  1. Which statute sets out the general powers of personal representatives to administer an estate?
  2. What is the difference between the powers of a personal representative and those of a trustee?
  3. Can a trustee delegate investment decisions to an agent? If so, under what conditions?
  4. What is the statutory duty of care for trustees, and when does it apply?
  5. True or false? A personal representative can distribute the estate before all debts have been paid if the beneficiaries agree.

Introduction

Personal representatives and trustees play central roles in the administration of estates and trusts. Their powers are defined by statute, the terms of the will or trust, and general law. For SQE1, you must know the extent of these powers, the duties attached to them, and the limits imposed by law and fiduciary principles.

Powers of Personal Representatives

Personal representatives (PRs)—executors or administrators—are responsible for collecting, managing, and distributing the assets of a deceased person’s estate.

Key Term: personal representative A person appointed to administer a deceased’s estate, either as executor (named in a will) or administrator (appointed under intestacy).

Statutory Authority

The main statutory powers of PRs are found in the Administration of Estates Act 1925 (AEA 1925):

  • Section 25 AEA 1925: PRs must collect and get in the real and personal estate of the deceased and administer it according to law.
  • Section 33 AEA 1925: PRs hold the estate on trust with a power of sale, enabling them to sell assets as needed.

Key Term: power of sale The authority to sell estate assets to pay debts, liabilities, or for distribution.

Main Powers

PRs have the following core powers:

  • Collecting assets: PRs can demand delivery of all estate property, including money, investments, and land.
  • Paying debts and liabilities: PRs must pay all funeral, testamentary, and administration expenses, as well as debts, before distributing the estate.
  • Distributing to beneficiaries: Once debts and expenses are paid, PRs distribute the remaining assets according to the will or intestacy rules.
  • Appropriation: PRs can transfer specific assets to beneficiaries in satisfaction of their entitlement, subject to statutory requirements and consents.

Key Term: appropriation The transfer of a specific asset to a beneficiary in satisfaction of their share or legacy.

Administrative Powers

PRs also have administrative powers similar to those of trustees, including:

  • Investment: PRs may invest estate funds pending distribution, subject to the statutory duty of care.
  • Delegation: PRs may delegate certain functions (e.g., investment management) to agents, but remain responsible for oversight.

Key Term: statutory duty of care The obligation to exercise such care and skill as is reasonable in the circumstances, especially when investing or delegating functions.

Fiduciary Duties

PRs are fiduciaries and must:

  • Act in the best interests of the estate and beneficiaries.
  • Avoid conflicts of interest and not profit from their position.
  • Keep proper accounts and provide information to beneficiaries.

Key Term: fiduciary duty The obligation to act loyally, honestly, and in good faith for the benefit of others (here, the estate and beneficiaries).

Powers of Trustees

Trustees manage property held on trust for beneficiaries. Their powers are derived from the trust instrument and statute, mainly the Trustee Act 1925 and Trustee Act 2000.

Key Term: trustee A person holding legal title to property on trust for beneficiaries, with powers and duties defined by law and the trust instrument.

Statutory Powers

Key statutory powers include:

  • Investment (Trustee Act 2000, s.3): Trustees have a general power to invest trust property as if they were the absolute owner, subject to the trust instrument and statutory criteria.
  • Delegation (Trustee Act 2000, s.11): Trustees may delegate certain functions, including investment, to agents, provided they set clear terms and monitor performance.
  • Power to insure (Trustee Act 2000, s.19): Trustees may insure trust property against risks.

Administrative and Dispositive Powers

  • Administrative powers: Concern management of trust property (e.g., investment, sale, insurance).
  • Dispositive powers: Concern the distribution of income or capital to beneficiaries, as set out in the trust instrument.

Key Term: administrative power A power relating to the management and preservation of trust property.

Key Term: dispositive power A power to distribute trust income or capital to beneficiaries.

Duty of Care and Investment

Trustees must comply with the statutory duty of care (Trustee Act 2000, s.1) when exercising investment and delegation powers. They must:

  • Consider the suitability and diversification of investments.
  • Obtain and review proper advice where appropriate.
  • Regularly review investments.

Delegation and Oversight

When delegating functions, trustees must:

  • Provide written policy statements to agents.
  • Monitor the agent’s performance.
  • Remain ultimately responsible for the trust.

Fiduciary Obligations

Trustees must:

  • Act in accordance with the trust instrument.
  • Treat all beneficiaries impartially.
  • Avoid conflicts of interest and not profit from their position (unless expressly authorised).
  • Keep accounts and provide information to beneficiaries.

Limits on Powers

Trustees and PRs cannot:

  • Act outside the scope of their statutory or express powers.
  • Distribute assets before all debts and liabilities are paid.
  • Delegate dispositive powers unless expressly permitted.

Appointment, Retirement, and Removal of Trustees

Trustees may be appointed, retire, or be removed as follows:

  • Appointment: By the trust instrument, existing trustees, or the court (Trustee Act 1925, ss.36–41).
  • Retirement: Trustees may retire if at least two trustees or a trust corporation remain (Trustee Act 1925, s.39).
  • Removal: Trustees may be removed for incapacity, misconduct, or by court order.

Worked Example 1.1

Scenario: The will of the deceased appoints two executors. One executor wishes to retire before the estate is fully administered. Can they do so, and what is required?

Answer: Yes, an executor (as trustee) may retire if at least two trustees or a trust corporation remain. The retirement must be by deed, and the continuing trustees must consent.

Worked Example 1.2

Scenario: A trustee wishes to delegate investment management to a professional agent. What must the trustee do to comply with the law?

Answer: The trustee must provide the agent with a written policy statement setting out investment objectives and restrictions, regularly review the agent’s performance, and ensure the delegation is in the beneficiaries’ best interests.

Worked Example 1.3

Scenario: A personal representative distributes the estate to beneficiaries before paying all known debts. A creditor later claims payment. Who is liable?

Answer: The personal representative is personally liable to pay the creditor if they distributed the estate prematurely. PRs must ensure all debts are paid before distribution.

Exam Warning

A common error is to confuse the powers of personal representatives with those of trustees. Remember: PRs act for the estate until distribution; trustees manage property held on trust, often after the estate is distributed.

Revision Tip

When answering SQE1 questions, always identify whether the person is acting as a personal representative or as a trustee, as their powers and duties may differ.

Key Point Checklist

This article has covered the following key knowledge points:

  • The statutory sources of authority for personal representatives and trustees in estate administration.
  • The main powers of personal representatives: collecting assets, paying debts, investing, and distributing the estate.
  • The core powers of trustees: investment, delegation, insurance, and distribution, subject to the trust instrument and statute.
  • The fiduciary duties and statutory duty of care applying to both roles.
  • The limits on powers, including the need to act within authority and avoid conflicts of interest.
  • The procedures for appointment, retirement, and removal of trustees.

Key Terms and Concepts

  • personal representative
  • power of sale
  • appropriation
  • statutory duty of care
  • fiduciary duty
  • trustee
  • administrative power
  • dispositive power
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Pleased to share that I have successfully passed the SQE1 exam on 1st attempt. With SQE2 exempted, I’m now one step closer to getting enrolled as a Solicitor of England and Wales! Would like to thank my seniors, colleagues, mentors and friends for all the support during this grueling journey. This is one of the most difficult bar exams in the world to undertake, especially alongside a full time job! So happy to help out any aspirant who may be reading this message! I had prepared from the University of Law SQE Manuals and the AI powered MCQ bank from PastPaperHero.

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