If you are in the process of creating a family trust, you may want to choose more than one trustee for your trust. Many parents consider naming their adult children as the co-trustees. If only one child is the trustee, it could cause resentment among the other siblings. But there are several significant problems that often arise with co-trustees managing a trust, so you may want to choose another option.
Problems with Co-Trustees
Co-trustees need to agree upon decisions that they make for the trust. It is not enough for one trustee to think that an action is a good idea, with the other trustee disagreeing. Both trustees must decide and agree together in the best interests of the beneficiaries. Sometimes trusts allow majority rule rather than unanimous decisions, but that does not solve the problem when there are only two trustees.
As you can imagine, family members who are trustees sometimes have disagreements. If the trust requires unanimous action or there are only two trustees, this could cause an issue with trust administration. Your trust cannot always divide up trust duties among several trustees, because each trustee has an overall fiduciary duty to the beneficiaries. So the co-trustees may reach a stalemate, or they may make a decision that is against one trustee’s better judgment.
Resolving Problems Among Co-Trustees
Co-trustees may need to seek probate court intervention when they cannot agree on a decision. The trustees may agree to ask the court for instructions, or one trustee may appeal to the court to prevent the other trustee from acting. If disagreements happen frequently, one trustee may resign, or one may petition the probate court for removal of the other trustee.
Going to court to resolve disputes among co-trustees is both expensive and time-consuming. The court costs may overburden a smaller trust, and ongoing litigation could harm the beneficiaries by holding up trust distributions. People thinking about appointment of multiple co-trustees may want to reconsider. Instead, they can name only one trustee – perhaps someone who is not a family member. Or they could name a family member but call a meeting to explain their decision to the other siblings or relatives.
Want to start planning your estate? Local attorney Andrew Szocka, Esq. provides thorough and speedy estate planning help in the Chicagoland area. To schedule a free initial consultation, visit the Law Office of Andrew Szocka, P.C. online or call the office at (815) 455-8430.