There are situations when appointing two trustees for a will can be beneficial for your estate plan. However, this is not always the case. It’s important to know when, and when not, to appoint two or more trustees when creating a will.
What Does a Co-Trustee Do?
A trustee is established as the manager of trust and the distributor of trust assets to beneficiaries. A co-trustee serves the same function, but they work with another trustee through the process.
The main duties of a co-trustee are to maintain and administer a trust. Depending on what assets are part of the estate plan, this could mean property management, maintaining a stock account, paying estate taxes, and more.
A co-trustees’s responsibilities might be specified in the will. Sometimes, when there is more than one trustee, they each have different tasks regarding the management of the trust.
Who Can Be a Co-Trustee?
Anyone who is not a minor can be appointed as a trustee. To become fiduciarily responsible for a trust, you’ll need to have been named a trustee or successor trustee by the grantor. The grantor is the individual who establishes the trust.
The Pros of Naming Co-Trustees
If two trustees have different skill sets, it might be beneficial to appoint them as co-trustees on a will. For example, if one candidate has experience with bookkeeping and the other has a vast knowledge of the stock market, they might work well together.
Naming two people to maintain an estate plan can split the workload, which can make maintaining the assets easier and more effective.
Having two trustees can also protect the beneficiaries’ interests. Because both trustees must agree on any course of action, it creates additional protections against poor decisions. Taking the decision-making power out of the hands of a single individual can help avoid future disagreements or any abuse of power.
The Downside to Appointing Co-Trustees
The biggest downside to appointing two trustees is that they may not work well together. If two parties cannot agree on the right decision, no decision will get made. When it comes to distributing assets the trustees must agree when or in what circumstance the funds should be released. If they cannot agree, the beneficiary may have a difficult time accessing the assets.
Another potential issue with co-trustees is that some tasks might be overlooked. If one trustee assumes the other is handling a task, some things might not get done.
Do Co-Trustees Have to Act Jointly?
Co-trustees usually need to agree on a decision before it can be done. This means that any decisions regarding changes or maintenance to the trust needs to be unanimous. The need to act jointly can be beneficial to the beneficiary, or it may cause problems.
Co-Trustee vs. Successor Trustee
A co-trustee is someone who is actively working with one or more trustees to maintain a trust.
Successor trustees, on the other hand, are named responsible for a taking over a revocable living trust after the trustee dies. When the grantor, or creater of the trust, dies, the living trust becomes an irrevocable trust.
At this time, the document can no longer be changed and the successor trustee takes over the trust administration. If there are more then one successor trustees, they might become co-trustees.
Are You Seeking to Remove a Co-Trustee?
It is possible to remove a co-trustee, but doing so can get complicated. Other trustees, the grantor, or the trust beneficiaries will need to petition the courts to have the trustee removed. An estate planning attorney might be needed for this process.
If you need advice on how to remove a co-trustee give us a call at 800-840-1998.