Executors, Guardians, Beneficiaries And Reserve Beneficiaries - What Does It All Mean?
If you’re not used to legal terminology, a will can be confusing. It makes it seem like writing a will is more complicated than it actually is. Thankfully these roles are quite simple to explain so we'll break them down together and allow you to be confident with the terminology.
The roles of an executor, guardian, trustee and beneficiary
What is an executor?
The executor will be the person who deals with your estate after you pass away. This involves registering the death, settling all of the debts, distributing the assets of the estate and completing any other administration associated with the death.
You can name an executor in your will and this gives them the power to control your estate. You can name more than one executor (up to four) to share the responsibility but often it will be your spouse or eldest child.
Roles of an executor
• Registering the death with the local registry office • Arranging the funeral depending on the deceased’s wishes • Applying for a Grant of Probate for the legal power to deal with the estate • Informing organizations about the death such as utility companies, the council and their bank • Valuing the estate, including any property, cash and possessions • Creating a list of all money owed such as mortgages, loans and household bills and settling any debts • Calculating the Inheritance Tax due, completing the required forms and paying it • Completing estate accounts if there is significant assets, liabilities, income and expenditure • Distribution of the estate to all the beneficiaries in accordance with the will
While all of these roles are the responsibility of the executor, it common that the load will be shared among family members. It’s important to choose an executor who will be able to handle the task as it can be a lot of hard work at a difficult time.
What is a guardian?
If the deceased has any children under the age of 18 then hopefully they have appointed a guardian in their will. A guardian will be responsible for the care of their children and stating this in your will is vital in avoiding the issue going through court.
The role of a guardian will essentially become the same as that of a parent. They will be financially responsible for the children along with all the major decisions such as schooling, social development and health issues.
Due to the enormity of the role, this should have hopefully been previously discussed and agreed upon with the potential guardian. Often there will be a financial provision in the will to support the guardian in looking after their children but this may be controlled by a trustee.
What is a trustee?
The trustee and the executor will often be the same person but the two roles are clearly defined. A trustee is responsible for the long-term management of the estate if any part of it has been held in trust. Essentially a trust is money (or other assets) that has been held back for a particular reason.
A common reason for this is money left for children under 18. The trustee will have to follow the rules of the trust and manage the assets in accordance with them. It could be, for example, that a guardian will get X amount per month for the care of the deceased’s children.
A trustee can be anyone from a family member or a professional, such as a solicitor. For a few reasons, it’s usually best to keep the trustee and guardians as separate people to share the responsibility. The trustees and guardians can then work together for the benefit of a child.
What is a beneficiary?
A beneficiary is anyone that has been named to receive something from a will. This could be any asset such as possessions, money or property. It will be the role of the executor as to when you will receive this benefit and it needs to be done in a reasonable time.
There is usually no active role to play for a beneficiary but there may be wishes in the will that need to be adhered to. This could be specific instructions on how assets should be managed and it’s the beneficiary’s responsibility to follow this instruction.
What is a reserve beneficiary?
A reserve beneficiary is someone who benefits from the will as the primary beneficiary is unable to. An example of this would be to name a child as your beneficiary and your grandchildren as a reserve beneficiary. This would mean any assets due to go to your child would then be passed to your grandchildren instead of becoming a part of the overall estate if your child had passed away.
Knowing your role
Hopefully now you have a good idea of what these roles mean and how they apply to you. While all being clearly defined and separate roles, the same person could technically be the executor, guardian, trustee and beneficiary of a will. It’s important that a will makes it clear who is taking up these roles so that it can be administered as efficiently as possible.
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