All trusts have trustees. Trustees are the managers, the fiduciary, the person in control. When a revocable trust is created, the creator of the trust is the most often also a trustee. That makes sense because if the creator is still alive and has the capacity to make financial decisions she is going to want to be in charge of her own financial affairs and property. In the case of couples who create revocable trusts together, they both would be trustees, co-trustees, while they are both alive and with capacity.
Successor Trustees are the individuals who are named in the trust as the person(s) to take over when the creator of the trust is either deceased or incapacitated. For parents with adult children, often the children are named as successor trustees. A frequent question then arises, should I name my children as Co-Trustees?
Naming a sole successor trustee with one or several more successor is usually the best course of action. This allows for the most efficient means of handling the trust administration. A sole trustee can make decisions without the need for additional input, write checks, sign documents, and only needs a single attorney to represent her. The duty of the trustee is to act in the best interest of the beneficiaries and carry out the wishes of the decedent. If she does not do a good job or breaches her duty to the beneficiaries, they can then have the trustee removed. Depending on the language in the trust itself, this can be done with or without the oversight of the court.
Naming two or more co-trustees can work, but there is more opportunity for increased administrative cost and infighting. The thinking behind naming co-trustees is the old saying, “Two heads are better than one.” This is often true, having two people involved, will probably lessen the likelihood either of those named will be able to treat the other trustee unfairly. In fact, by default, both co-trustees have the same power, obligations, and duties. The problems with co-trustees often arise just for this reason though. The named co-trustees are often siblings, who may or may not think alike, or even like each other. When this happens, they will often see separate counsel and insist on doing things their way. The infighting stalls the normal operation of the administration and makes everything take longer and cost more. This ultimately ends up coming out of the beneficiaries’ pockets (despite the fact that often the trustees are also the beneficiaries).
We regularly represent a large number of trustees (and co-trustees) to conduct trust administrations for their deceased loved ones, so we know exactly how the planning side will impact the administration side.
Contact Tresp Law, APC today to discuss the advantages and pitfalls of naming co-trustees with our Estate Planning attorneys today.
