What are STEP provisions?
Your will contains provisions relating to the responsibilities of your executors and trustees. These provisions are under the heading General Provisions.
Your executors make sure your estate is distributed according to your will. Your trustees look after any gifts that may not be delivered immediately because they are held in trust, for example for someone under 18.
Executors and trustees are given some powers by law, but it is usual to include in your will additional powers and provisions. It’s usual because the laws are quite limited, and don’t always allow executors and trustees to do the things we would expect them to do, or be able to do.
At Farewill we include a set of general provisions, that have been professionally drafted and approved by STEP, and are used widely by other professional will writers and solicitors. STEP is the Society of Trust and Estate Practitioners, a global professional association that promotes high professional standards in this area of law.
The next section outline some of the most important STEP provisions for you, but you should familiarise yourself with them all. You can read them online here.
Putting your beneficiaries first
Your beneficiaries must always come first. Executors and trustees would be breaking the law if they put their own interests before those of your beneficiaries. Sometimes, laws that try to protect the independence of executors and trustees, get in the way of what all the beneficiaries want.
An example is around property. Usually an executor or trustee cannot buy property belonging to the estate or trust. The STEP provisions relax these rules, to allow executors and trustees (who may also be beneficiaries) to buy such property, imposing instead certain safeguards to comply with when such sales happen.
When executors and trustees make mistakes
If you have appointed family or friends as your executors and trustees they may not be used to administering estates, and may make mistakes that a professional executor or trustee would not, or should not. A professional executor or trustee is someone, or a company (like Farewill Trustees), who charges a fee for administering estates or looking after trusts.
Generally, if an executor or trustee does something which means the beneficiaries lose out, they are financially responsible for making good that loss, even if that means paying the beneficiaries out of their own pocket. But, it is generally accepted that it’s unfair to hold friends and family to the same standards as professionals. So, under the STEP provisions they’re not.
To be held responsible for a loss, family and friends acting as your executor or trustee must have either been fraudulent or dishonest. Fraud is committed when someone tricks somebody else to make a gain. Dishonesty covers acts like lying, cheating or stealing.
Professionals are held financially responsible for fraud and dishonesty too, but they are also held responsible negligence and carelessness. Negligence is committed when someone doesn’t take the care required of them by law (for example meeting common professional standards) and that lack of care causes harm or financial loss. Carelessness is very similar to negligence.
You can nominate Farewill Trustees as your executor in the Executor section.
Beneficiaries under 18
The STEP provisions give your executors and trustees more choice over how they manage gifts you leave to children.
For smaller gifts it can be sensible to pay the money (or entrust an item) to the child’s parent or guardian, and let them look after it, rather than your executor become a long-term trustee. If the child is 16, they may be mature enough to receive the gift themselves. If the gift is larger, then making payments to the child’s parent or guardian whilst the child is under 18, or to a mature 16 year old, may be appropriate too.
The STEP provisions make such flexibility possible. And, whilst the executors and trustees must always put the child’s interests first, they can make payments without having to ask what the money will be used for, unless there is reason to be suspicious.