Who’s who in the fiduciary zoo

David Knott of Private Client Trust.

Unless you are familiar with fiduciary terms, many of the roles and responsibilities of the different people involved in the effective carrying out of a Will can be confusing.

This is according to David Knott of Private Client Trust, the fiduciary services division of Private Client Holdings, and a member of the Fiduciary Institute of South Africa who unpacks the duties of some of the key players when it comes to Wills and Estates.

The Executor

“An executor, once appointed by the Master of the High Court, is the person responsible for the administration and settlement of a deceased estate. They must take charge of all assets of the deceased, preserve them and if necessary, or on the instruction of the heirs, dispose of them in the best interest of the estate,” says Knott.

“They are not allowed to speculate or put estate assets at risk, neither are they allowed to enter into contracts which would bind the estate. The executor must determine which claims against the estate are valid and in due course these must be settled. The final income tax and possibly estate duty liabilities would also need to be assessed.”

Knott advises that the executor must also render to the Master a full and accurate account, known as a Liquidation and Distribution Account (effectively a snapshot of the deceased’s affairs at the time of death and how the estate is to be distributed). “Once this Account has been approved by the Master it is required to lie for a period of public inspection which affords any aggrieved party the opportunity to lodge an objection. Assuming that no objection is received the executor may then proceed with the transfer of any assets and the distribution of cash to the heirs or the trustee as the case may be, take their fee and close the file.”

The Trustee

“A testamentary trustee takes over where the executor’s duties terminate if a trust has been created in terms of the Will,” explains Knott. “The trustee derives their investment powers from the Will and unlike an executor is normally free to deal with the investment, sale and re-investment of trust assets. The trustee would distribute the trust income as directed in the Will until such time as the trust terminates, at which time they would be required to distribute to the correct beneficiaries. Until then, the trustee would be required to keep accurate cash records, including annual financial statements, minutes of important decisions, lodge income tax returns and preserve the trust assets.”

“A trustee could also have been nominated in terms of an inter vivos trust deed in say a family trust created following an estate planning exercise. This trustee would have similar powers and obligations to that of a testamentary trustee and both also require the consent of the Master before they may act,” says Knott.

The Guardian

According to Knott, the law does not regard a minor child as being competent to manage their own affairs. “Normally the parents as natural guardians would supervise the child’s activities but in instances where there are no natural guardians, the Master would need to appoint a guardian or tutor to look after the child’s personal requirements - for example where to live, be educated and other day to day life decisions. The guardian would not be responsible for the child’s financial well-being and would need to look to the trustee for reasonable expenses. A guardian’s duties terminate when the child attains majority.”

The Curator

“In the absence of a trustee and if the minor child possesses property, the Master would need to appoint a curator who would be responsible for the management of the child’s finances and other similar duties to that of a trustee,” says Knott. “A curator could also be appointed to manage the affairs of a major person who cannot be located, is mentally incapable of managing their own affairs or is a prodigal. Curators are also required to keep all records as a trustee would but are additionally required to lodge an annual account with the Master. A curator’s duties would terminate when a minor child attains their majority, when the absent person has been located, upon the person regaining his mental faculties or being rehabilitated or upon the death of that person. The curator would then need to account fully to the executor.”