Harmonizing Fiduciary Obligations: The Personal Representative and Trustee in Estate Administration

Written by FARAH NAZIRA | 5/20/2024 | Conveyancing & Real Estate

random
In estate administration, determining whether the deceased died testate or intestate is crucial. Testacy indicates a valid will is in place, with executors appointed to manage the deceased's estate. In contrast, intestacy occurs when there is no will, leading to the court appointing an administrator to perform duties similar to those of an executor. Under Malaysian estate administration law, a personal representative must be appointed, whether as an executor or administrator, prior to handling the deceased's estate. The role of the personal representative in estate affairs requires a profound comprehension of their duties and responsibilities. The term "personal representatives" includes both executors and administrators. They are commonly grouped together as the personal representatives of the deceased's estate because they fulfill similar roles in estate administration and have obligations to the estate beneficiaries. In the context of trustee, the definition of trust in Halsbury’s Law of Malaysia serves as a valuable starting point for grasping the concept of a trustee. In essence, a trustee is an individual entrusted with property or rights that they hold or manage on behalf of others or for specific purposes. When acting as a trustee, he is obligated to manage the entrusted property or rights for the benefit of others or to achieve particular objectives. In Malaysia, the role of a personal representative is regulated by the Probate and Administration Act 1959, while that of a trustee is governed by the Trustee Act 1949. Despite being governed by distinct statutes, there exists a conflict regarding their distinct capacities. This arises from the similarity in powers, duties, and obligations between a personal representative under the Probate and Administration Act and a trustee under the Trustee Act 1949, leading to ambiguity in delineating their respective roles. The distinction between the roles of a personal representative and a trustee was explored in the case of Re Ponder. The ruling established that once a personal representative has settled all debts and expenses, thereby completing their duties, they hold the remaining assets not merely as a representative but also as a trustee. They retain their status as executor since they may be required to manage any assets that are later discovered within the estate. The court also determined that personal representatives, whether serving as executors or administrators, take on the fiduciary responsibilities of trustees. Similarly, in the case of Re Estate Of Yong Wai Man; Ex Parte Yong Khai Min, it was decided that an administrator who serves as a guardian and holds property for a minor is deemed a trustee, thus falling under the purview of the Trustee Act 1949 and subject to any court or judicial directives. Furthermore, in the case of Tay Choo Foo @ Tay Chiew Foo v. Tengku Mohd Saad @ Tengku Arifaad bin Tengku Mansur & Ors , the court established that an estate administrator is deemed a constructive trustee in the eyes of the law. This implies that the administrator or personal representative undertakes a trusteeship role. However, this contention remains inconclusive, as evidenced by the case of Koh Siew Keng & Anor v. Koh Heng Jin , where the Court of Appeal determined that even if an individual does not meet the criteria for a constructive trustee or a trustee under a resulting trust, their position as an executor and personal representative of the testator's estate still falls within the broader definition of "trustee" outlined by the Trustee Act 1949. It is established that in conflicts between the roles of a personal representative and a trustee, the former takes precedence. However, there is no clear objective criterion for determining when and how a personal representative becomes a trustee, as an individual may serve as a personal representative for certain assets and as a trustee for others. As the distinction between the duties of a personal representative and those of a trustee is often ambiguous, each case must be assessed based on its specific facts and circumstances. Therefore, any individual entrusted with the responsibilities of a personal representative or trustee must fulfill their duties diligently and reasonably, as failure to do so may result in legal action being taken against them by beneficiaries or other interested parties involved in the estate.