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HMRC internal manual

Trusts, Settlements and Estates Manual

Legal background to trusts and estates: the difference between executors and trustees

The executor has the duty of standing in the place of the deceased in order to wind-up his estate and distribute it in accordance with the will or the law of intestacy as the case may be. While their basic function is to distribute assets, the fiduciary character of the executor’s office resembles that of the trustee, but their powers are somewhat wider and the class to which their responsibilities extend is also wider (e.g. it includes creditors of the deceased, as well as beneficiaries of the estate). They gather in the deceased person’s estate in their hands. Then they pay the deceased’s debts and satisfy the claims against the estate, and distribute the estate assets to the beneficiaries under the will or under the rules of intestacy, as soon as possible.

The position of a trustee differs from that of an executor of a deceased person. In contrast, trustees have an underlying duty to hold onto property for the benefit of beneficiaries. The trustee is bound simply to carry out the terms of the trust on which he holds the property. He has only such power as is accorded to him by law or by the trust instrument.

When the deceased person’s estate has been fully administered the executor has completed their duty as such. If the terms of the will are such as to give rise to a continuing trust, the property which is to form the trust fund is transferred to the persons who are to act as trustees. These may be the same persons as those who have acted as executors, but it is important to distinguish between the two roles. It is a question of fact when the administration of an estate is completed, and it is frequently important for Income Tax purposes to determine the date, especially in view of the provisions of ITTOIA/Pt5 Ch6.