Personal representatives and trustees in estate administrati...

Learning Outcomes

This article outlines the roles, powers, and duties of personal representatives and trustees in estate administration, including:

• the legal distinction between executors, administrators, and trustees and how each capacity arises
• procedures for appointment, renunciation, and replacement, and how authority is proven by grants of representation
• the main fiduciary duties, statutory duty of care, and personal liability risks for personal representatives and trustees
• application of the Trustee Act 2000 general power of investment, standard investment criteria, and advice and review obligations
• trustees’ powers to delegate investment management and other functions, together with required safeguards and supervision
• creation and operation of statutory trusts on intestacy, including how children’s shares are held, maintained, and advanced
• management of competing interests between life tenants and remaindermen and the impact of TLATA 1996 on trusts of land
• use of statutory powers of maintenance and advancement under the Trustee Act 1925, as amended by the Inheritance and Trustees’ Powers Act 2014
• key practical steps in estate administration, such as securing assets, paying debts and tax, advertising for creditors, and protecting against claims
• how these principles are commonly examined in SQE1 problem questions, including typical traps and issues around breach of trust and remedies

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, with a focus on the following syllabus points:

• 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
• standard investment criteria, advice and review duties under Trustee Act 2000 ss 4–5 and the general power of investment (s 3)
• trustees’ powers of maintenance (TA 1925 s 31) and advancement (TA 1925 s 32 as amended by the Inheritance and Trustees’ Powers Act 2014)
• trust of land issues under TLATA 1996 (consultation, occupation rights, and trustees’ control)
• appointment, retirement, and replacement of trustees under statutory and court powers

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. What is the difference between a personal representative and a trustee in the context of estate administration?
2. Who is entitled to act as an administrator when someone dies intestate?
3. Name two core fiduciary duties of trustees in estate administration.
4. 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. Trustees operate within a detailed statutory framework that governs investment, land acquisition and occupation, delegation, maintenance and advancement, and accountability to beneficiaries. Personal representatives manage the estate to the point of distribution and, where trusts arise, may then act as trustees to hold and manage trust property for the period required by the will or intestacy.

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). Executors may have “power reserved” to them if a co‑executor takes the grant first; they can later join the administration by taking a subsequent grant.

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. A person entitled in a lower category cannot be appointed while a person in a higher category is willing and able to act. Where beneficiaries are minors, at least two administrators are required. Administrators acquire authority only on the grant of letters of administration.

If a named executor cannot or will not act, they may renounce. Renunciation must be in writing and filed; once effective, it cannot be withdrawn. Renouncing executorship does not affect any separate appointment as trustee under the will. Where an executor is unwilling to act but has not renounced, citations may be used to compel action, and caveats may be entered to prevent a grant until issues are resolved.

Main Duties of Personal Representatives

Personal representatives must:

1. Collect and secure assets: Identify, locate, and safeguard all estate property.
2. Pay debts and liabilities: Settle outstanding debts, taxes, and expenses.
3. Distribute the estate: Transfer the remaining assets to beneficiaries under the will or, if intestate, according to the statutory rules.
4. 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.

PRs are subject to a statutory duty of care: the Trustee Act 2000 s 1 applies to PRs as it does to trustees. They must act with reasonable care and skill, taking into account any special knowledge or experience, and a higher standard applies to professional PRs.

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. Section 27 Trustee Act 1925 adverts (London Gazette, appropriate local press, and any other suitable publication) provide protection against unknown claimants, but PRs remain exposed to claims from known but missing beneficiaries unless they adopt measures such as a Benjamin order (court order permitting distribution on an assumed basis), an indemnity from beneficiaries, or missing beneficiary insurance. PRs commonly delay final distribution until six months after the grant to protect against claims under the Inheritance (Provision for Family and Dependants) Act 1975.

An executor who intermeddles with the estate may lose the right to renounce and may be treated as an executor de son tort, becoming liable for assets handled without authority.

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.

Trustees often are the same individuals as the executors, expressly appointed as trustees in the will. Once the estate is administered (debts and specific gifts discharged), executors transfer trust assets into their capacity as trustees to manage them for the trust period.

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.

Appointment of Trustees

Trustees are usually appointed by the will. If not, or if a trustee is unable or unwilling to act, the continuing trustees may appoint a replacement under the Trustee Act 1925 (commonly s 36), or the court may appoint if necessary. Retirement without replacement requires at least two trustees or a trust corporation remaining in office. Beneficiaries who are all of full age and collectively absolutely entitled may, under TLATA 1996 s 19, direct trustees to retire and appoint replacements, unless the trust instrument excludes this.

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 (Trustee Act 2000 s 1), with a higher standard for professionals.
• Duty of loyalty: Trustees must not place themselves in a position of conflict or profit from their role unless expressly authorised (e.g., a charging clause or the statutory regime for professional trustees).
• Duty to act jointly and personally: Trustees generally act unanimously and must not improperly delegate, save where statute or the trust instrument permits.
• Duty to invest: Trustees must invest trust assets prudently, applying the general power of investment (TA 2000 s 3), the standard investment criteria (s 4: suitability and diversification), and the duty to seek proper advice where appropriate (s 5).
• Duty to keep accounts and provide information: Trustees must keep accurate records and provide information to beneficiaries entitled to receive it.
• Duty to act impartially: Trustees must balance the interests of different classes of beneficiaries (e.g., life tenants and remaindermen) and avoid favouring one group without authority.

Trustees who breach trust (e.g., speculative investing, failing to review investments, or favouring one beneficiary without basis) may be personally liable for loss. The court has discretion to relieve liability under TA 1925 s 61 if a trustee acted honestly and reasonably.

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 acquire UK land for investment or for occupation by a beneficiary (TA 2000 s 8), and any wider power if expressly stated in the will
• Power to delegate certain functions (for example, asset management) with appropriate safeguards, including a written policy statement and periodic review
• Power to insure trust assets
• Powers to pay maintenance out of income (TA 1925 s 31) and advance capital (TA 1925 s 32 as amended)

Trustees must review investments regularly and seek proper advice where appropriate. Where the trust holds land, TLATA 1996 applies, adding duties (e.g., consultation with beneficiaries where appropriate) and giving occupation rights to certain beneficiaries, subject to trustees’ reasonable restrictions.

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 with HMRC’s Trust Registration Service where required and keeping up-to-date and accurate records. They should document investment policy, advice received, and review cycles. Professional trustees may charge reasonable remuneration where authorised (for example, via a charging clause or TA 2000 s 29 for trust corporations or trustees acting in a professional capacity with co-trustee consent).

Trustees must generally act jointly and personally, but may delegate certain functions (particularly investment management) in accordance with TA 2000, provided they set a written policy statement, select and supervise agents carefully, and periodically review the arrangements.

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.

Worked Example 1.4

A will trust holds a fund for minor beneficiaries. The trustees are considering using income to pay for a 12-year-old beneficiary’s participation in an educational programme abroad. Is this a proper use of the maintenance power?

Answer:
Likely yes. Under TA 1925 s 31, trustees may apply income for a minor’s maintenance, education, or benefit. The programme clearly relates to education and benefit. Trustees should document their decision and ensure payments go directly to the provider or a responsible adult with instructions for use.

Worked Example 1.5

Trustees hold capital for beneficiaries who will become entitled at 25. A 22-year-old seeks an advance to buy a modest first home. Can trustees use the power of advancement?

Answer:
Yes, subject to TA 1925 s 32 (as amended). Trustees can advance up to the whole of the beneficiary’s presumptive share, provided any prior life tenant consents if their income would be prejudiced. The sum advanced is brought into account when the beneficiary’s absolute entitlement arises.

Worked Example 1.6

A trust of land includes a vacant property. An adult beneficiary wishes to occupy it. Must the trustees permit occupation?

Answer:
Not necessarily. Under TLATA 1996 s 12, a beneficiary may have a right to occupy if the trust’s purpose includes occupation or the property is held to be available for occupation. Trustees can restrict or exclude occupation under s 13 on reasonable terms, taking into account the trust’s general interests (e.g., intended sale to fund all beneficiaries’ shares).

Worked Example 1.7

Trustees delegate portfolio management to an investment firm. What safeguards must they observe?

Answer:
Trustees should set a written policy statement outlining investment objectives and risk parameters, choose a suitably qualified agent, monitor performance, and periodically review the arrangement. They must continue to apply the s 4 standard investment criteria and, where appropriate, take and document proper advice (TA 2000 ss 4–5).

Worked Example 1.8

One of two trustees wishes to retire. Can they retire without appointing a replacement?

Answer:
Yes, provided at least two trustees or a trust corporation remain and the co‑trustees consent by deed. Otherwise, a replacement should be appointed under TA 1925 powers or by the court if necessary.

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.

Under the Administration of Estates Act 1925 s 46, shares for issue are held on statutory trusts with income accumulating until entitlement, subject to the trustees’ powers of maintenance and advancement. TA 1925 s 31 permits application of income for maintenance, education or benefit of minors; s 32 allows advancement of capital, now up to the whole presumptive share for trusts arising on or after 1 October 2014. Trustees should balance the interests of all potential beneficiaries, document decisions, and respect any prior life interests where present.

Trustees of statutory trusts have the same fiduciary duties and statutory powers as trustees of will trusts. They must keep proper accounts, invest prudently, and can insure assets. If land is included, TLATA 1996 applies to any trust of land that arises, conferring rights and obligations around occupation, consultation, and sale decisions.

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. Where beneficiaries of full age are absolutely entitled, they may bring the trust to an end under the rule in Saunders v Vautier and require distribution, or use TLATA s 19 to direct retirement and appointment of trustees (subject to any exclusion in the trust instrument).

Where trusts include land, trustees should be mindful of beneficiaries’ expectations as regards occupation and sale, but must give effect to the trust’s overall interests. Trustees can set reasonable occupation conditions (e.g., payment of outgoings, insurance, and a fair contribution where occupation reduces others’ enjoyment or value).

Trustees should ensure compliance with any HMRC trust registration requirements and consider tax implications of disposals (e.g., income tax on trust income, capital gains tax on asset sales, and availability of hold-over relief on certain appointments out of trust). Trustees must also consider any survivorship provisions, substituted gifts for issue that predecease, and the incidence of debts on assets to avoid unintended prejudice to beneficiaries.

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.
• TA 1925 s 31 permits maintenance payments out of income for minors; TA 1925 s 32 (as amended) permits advancement of capital up to a beneficiary’s presumptive share.
• TLATA 1996 governs trusts of land: beneficiaries may have occupation rights (s 12), trustees can set reasonable restrictions (s 13), and there is a duty to consult in certain cases (s 11).
• Trustees must apply the TA 2000 general power of investment and standard investment criteria, seek proper advice, and review investment decisions.
• PRs can protect against unknown claimants by TA 1925 s 27 adverts and should consider delaying distribution for six months post-grant to guard against 1975 Act claims.
• 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