An Executor is someone chosen in a Will to handle a person’s assets and liabilities.
The Executor takes on the important role of administering the deceased's estate, such as managing assets and following the instructions in the Will.
This job can be tough, especially for complicated estates. Appointing family members as Executors might be hard for them, especially when they’re already emotionally overwhelmed with the loss of a loved one.
The executor’s duties include:
- Collecting and managing the testator's assets
- Paying off debts and taxes owed by the estate
- Distributing the remaining assets to the beneficiaries as per the Will. Some Beneficiaries may not take their gift right away such as a young person of 16 or when the Testator has expressly chosen to delay the gift. In such cases, the Executor has an extra duty to act as Trustee until the Beneficiary can take the gift for himself.
- Filing necessary legal documents and managing any disputes
Appointing a professional Executor may be a better option as it can alleviate the challenges and emotional strain associated with administering a loved one’s assets.
In Singapore, one such option is appointing a licensed trust company to act as the corporate executor.
The question is, how different is it between appointing a corporate executor and appointing an individual as the executor?
A corporate executor is useful in the following scenarios:
- When the testator has no reliable individual to act as the executor. This could be due to a small nuclear family or when all the beneficiaries are minors
- Potential conflict among family members and avoidance of disputes
- Family members are all overseas
Comparison of an Individual Trustee and Corporate Trustee
| Individual Trustee | Corporate Trustee | |
| Objectivity | • Have personal knowledge, relationships and familiarity with the family dynamics, which can lead to conflicts of interests. • Usually accepted based on a personal relationship and favour. |
• Objective in decision-making. • Not influenced by personal relationship or family dynamics. • Reduces frictions amongst family members and maintain harmony. • Higher level of expectation on fiduciary duty to the trust. |
| Expertise | • Lack of professional expertise can pose challenges in handling complex trust matters. | • Dedicated expertise in trust administration. • Experienced in trust matters arising for day-to-day handling of past and existing trusts. • Structured approach to managing trusts, ensuring compliance with regulations and best practices. |
| Succession Planning | • A change of trustee requires a deed of appointment and transfer of the Trust’s assets to the new Trustee. This can be cumbersome. | • If directors or employees of the corporate Trustee change, the corporate Trustee remains the same legal entity, and there is no need to transfer assets to another entity. |
| Liability | • The Trustee is responsible for the Trust’s affairs and debts and can be held personally responsible. | • A company is a separate legal entity, and the directors of the company have limited personal liability. |
| Continuity and Perpetuity | • Limited to the age, health or changes in personal circumstances. • May resign, become incapacitated and disrupt the trust administration. |
• Advantage of continuity and perpetuity. • Consistent management of the trust assets over the long term. |
| Cost | • Zero to low fees, especially if a family member or a close friend may serve without compensation. | • Ongoing annual fees based on a percentage of the trust assets. |