Updated 4 November 2026
Probate Problem #30: What are the Responsibilities of a Trustee During Probate?
Back to CM Law’s Ultimate List: 50 FAQs on Probate
Being named as an executor and trustee can feel like one appointment, but the responsibilities change as an estate progresses. You may first need to secure a home, collect assets and pay debts, then manage a continuing trust for children or other beneficiaries. Understanding which role you are performing helps you make decisions, keep the right records and recognise when advice is needed.
What is the difference between an executor and a trustee?
An executor administers the deceased person’s estate: identifying assets, paying liabilities and distributing what remains under the will. A trustee manages property held under an ongoing trust. The same person may perform both roles, but their authority and responsibilities depend on the stage of administration and the will’s terms.
The NSW Legal Services Commissioner explains this distinction. Record when assets are transferred or appropriated to a continuing trust, rather than treating every estate payment as a trust distribution. Obtain advice where those functions overlap.
Does a testamentary trust avoid probate?
A testamentary trust is created through a will. Including one does not automatically remove the need for probate or allow assets to bypass estate debts. Whether a grant is required depends on the assets and circumstances, while the executor must administer the estate before transferring the relevant property into the continuing trust.
Existing family trust assets require separate investigation. The deceased may have held company shares, loans or control rights connected with that trust. Check ownership documents and obtain advice before including or excluding those interests from the estate inventory.
What should be done first to protect the assets?
Start with the will, death certificate and a clear inventory of assets and liabilities. Secure valuables, identify bank accounts and check property insurance. Keep estate money separate from personal funds. Confirm your authority before selling, transferring or accessing assets, especially where another person also claims ownership.
The NSW executor guide outlines these early responsibilities. Tell the insurer if a property becomes vacant, check policy conditions and arrange necessary maintenance. Keep dated photographs, inspection notes and receipts so later decisions can be explained.
Must a trustee sell property when its value falls?
A fall in value does not automatically require an immediate sale. The decision must reflect the will or trust terms, available powers, liabilities, beneficiary interests and the circumstances. Obtain appropriate valuation and professional advice, compare realistic options and document why retaining or selling the property is justified.
Consider insurance, repairs, rental income, tax, selling costs and the cash needed to pay debts. A declining market alone does not prove mismanagement. Equally, leaving an uninsured or deteriorating property unattended can expose the estate to avoidable harm.
How should trust investments be managed?
NSW trustees must exercise the applicable standard of care, diligence and skill when investing. The trust instrument matters. Investment decisions should address the trust’s purpose, beneficiaries’ circumstances, risk, liquidity and diversification. The Trustee Act also provides for reviewing investment performance, individually and overall, at least annually, subject to the trust instrument.
Sections 14A–14C of the Trustee Act 1925 guide these duties. A professional trustee faces a professional standard. Diversification is a relevant consideration, not an instruction to buy a fixed number of assets or a guarantee against loss.
How can a trustee manage conflicts between beneficiaries?
A trustee must act within the trust’s terms and exercise powers for proper purposes. Impartiality does not always mean equal payments: beneficiaries may have different entitlements. Avoid unauthorised personal benefits and conflicts, and seek independent advice before transactions involving yourself, relatives, your business or another beneficiary.
For a trust supporting one person during their lifetime and others later, consider both sets of interests. NSW trustee guidance explains the continuing obligations. Keep a written record of relevant considerations, without assuming every beneficiary can demand every confidential document.
What accounts and records should be kept?
Maintain a clear record of money received, expenses paid, asset sales, investments and distributions. Keep bank statements, invoices, valuations and receipts, and reconcile them regularly. Executors and administrators must account to beneficiaries, although not every estate requires accounts to be filed with or formally passed by the Supreme Court.
The Court’s accounts guidance identifies situations requiring filing and explains commission applications. Use an estate or trust account appropriate to the role, retain supporting documents and provide meaningful progress updates. Silence and incomplete records make legitimate decisions harder to explain.
What tax responsibilities need attention?
Check whether a final return is required for the deceased and whether the estate must lodge trust tax returns for income received after death. A continuing testamentary trust has its own tax obligations. Do not assume that every inheritance is taxable, or that inherited assets and later sales are automatically tax free.
The ATO’s deceased estate guidance and NSW tax checklist help identify the separate tasks. Engage a registered tax agent where needed, retain acquisition and valuation records, and reserve enough money for liabilities before making distributions.
When can estate assets be distributed?
Distribution requires more than receiving probate. Check debts, expenses, tax, beneficiary entitlements and notified claims first. NSW law provides conditional protection for certain distributions made at least six months after death and after a compliant notice period of at least 30 days. These safeguards do not authorise ignoring known claims.
The Court explains intended distribution notices. Under Succession Act sections 58 and 93, family provision applications ordinarily have a 12-month limit from death, with late filing possible by court order or the parties’ consent. A notice does not shorten that limit; obtain advice before distributing where a claim is notified or expected.
What if the trust benefits a child or vulnerable person?
Follow the trust’s age conditions, purposes and payment powers. A parent’s request does not itself authorise paying a child’s entire inheritance to that parent. Check who may receive money, whether maintenance or education payments are permitted, and how each payment advances the beneficiary’s interests within the relevant legal framework.
Keep budgets and evidence supporting payments. For an adult beneficiary with impaired decision-making capacity, establish who has lawful authority to act and whether court directions are needed. Do not assume a relative’s involvement gives that authority.
Can executors and trustees pay themselves?
Proper expenses and remuneration are different. Keep evidence of expenses properly incurred for the estate or trust. Payment for your time requires a lawful basis, such as an applicable charging clause, valid beneficiary agreement or court order. Do not take fees simply because the work has been demanding.
The Supreme Court’s commission guidance explains the estate process. Check the scope of any charging clause and obtain advice about consent where children or future beneficiaries are affected. Avoid duplicate charges for work already performed by paid advisers.
Does professional advice protect a trustee from liability?
Advice can help you make a sound decision, but hiring a professional does not automatically excuse a breach. Choose an appropriately qualified adviser, provide complete information and consider the advice properly. Where management or interpretation is uncertain, a trustee may seek the Supreme Court’s advice or directions under section 63.
Protection under Trustee Act section 63 concerns the subject of the application and requires acting in accordance with the Court’s advice. Fraud, wilful concealment or misrepresentation defeats that protection. An ordinary solicitor’s opinion is not a court direction.
What happened in Chick v Grosfeld?
In Chick v Grosfeld [2012] NSWSC 1166, an accountant appointed executor and trustee moved $85,040 from the estate into his business working account. All but $40 was repaid, without interest. White J found serious breaches, including misleading accounts and improper advance remuneration, which put the estate at risk.
The will also provided an education fund for grandchildren. Estate administration remained incomplete, and the Court explained that the trusts under the will had not yet come into existence. Repayment did not excuse the misuse of estate money.
What did the Court decide, and what is the lesson?
The Court concluded that the probate grant should be revoked and NSW Trustee and Guardian appointed administrator with the will annexed. Remuneration issues and costs were left for further consideration. The decision illustrates the importance of separating funds, keeping truthful accounts and respecting the limits of payment powers.
If you discover an accounting error or unauthorised payment, preserve the records and seek advice promptly. Beneficiaries concerned about administration should request an explanation and independent legal advice; disagreement alone does not establish grounds for removal.
How can CM Lawyers help with trustee responsibilities?
CM Lawyers can review the will, clarify your role and advise on probate, estate administration, proposed distributions and trustee duties. Bring the will, any grant, asset schedule, accounts and correspondence about claims. Early advice can help identify missing information and the decisions that need attention before money changes hands.
For help with estate administration in NSW, call (02) 9557 9000, email lawyers@cmlaw.com.au or contact CM Lawyers. We can explain the legal steps relevant to your appointment and circumstances.
This article provides general information about NSW law and is not legal or tax advice. The cited case is a real published decision; its outcome depended on its facts. Obtain advice about your circumstances.
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