Appointing a Trustee is a significant decision when setting up a trust as part of your estate plan. You may find yourself torn between two or more prospects for the role of Trustee. One option to consider is appointing more than one Trustee (Co-Trustees). To help you decide if appointing more than one Trustee is a good idea, the Los Angeles attorneys at Schomer Law Group, APC discuss the advantages and disadvantages of this approach.
Understanding Trusts
A trust is a legal arrangement in which a Settlor (the trust’s creator) designates a Trustee to manage and safeguard assets for the benefit of one or more third parties known as beneficiaries. Trusts fall into two primary categories: testamentary trusts, established after the Settlor’s death through their Last Will and Testament, and living trusts, created and managed during the Settlor’s lifetime. Trusts can also be revocable (modifiable or terminable by the Settlor) or irrevocable (not modifiable by the Settlor).
Trustee Roles and Responsibilities
The Settlor appoints the Trustee in the trust agreement, a legal document outlining the trust’s terms. The Trustee’s primary duties and responsibilities include:
- Adhering to the trust terms
- Safeguarding and managing trust assets
- Investing trust assets
- Communicating with trust beneficiaries
- Distributing assets to beneficiaries
- Making decisions regarding discretionary distributions
- Resolving conflicts
- Defending the trust in legal matters
- Maintaining detailed records
- Filing trust tax returns and settling tax obligations
Is Appointing More Than One Trustee the Right Choice?
As the Settlor, you have the freedom to select any individual as the Trustee, and you can even appoint multiple Co-Trustees. People often choose Co-Trustees for various reasons, such as:
- Avoiding potential conflicts among adult children by appointing multiple Co-Trustees.
- Combining a family member’s trust with a professional’s expertise, balancing trust and practical guidance.
- Believing that Co-Trustees can provide mutual support and act as a built-in “sounding board.”
While these are valid reasons for appointing Co-Trustees and can be considered advantages, there are important disadvantages to consider as well, including:
- Co-Trustees are entitled to fees, leading to higher administration costs as more Trustees are involved.
- Multiple Trustees can result in delays if unanimous agreement is required before taking any action.
- An even number of Trustees may lead to decision-making gridlock if they cannot reach a consensus.
- Appointing family members as Co-Trustees can inadvertently generate family conflicts.
- The combination of a professional and a non-professional Trustee muddies the proverbial waters. To avoid this, consider naming a family member as the primary Trustee and allowing them to hire an attorney and/or financial advisor to provide guidance during trust administration.
Ultimately, the choice of Co-Trustees or a single Trustee depends on your specific circumstances, goals, and the dynamics of your family or trust beneficiaries. It is essential to carefully weigh the advantages and disadvantages to make the most appropriate decision for your trust.
Do You Have Questions about Appointing More than One Trustee?
For more information, please join us for an upcoming FREE seminar. If you have additional questions about appointing a Trustee, contact the experienced Los Angeles trust attorneys at Schomer Law Group APCby calling (310) 337-7696 to schedule an appointment.
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