Many of our clients decide to take advantage of the benefits a trust offers. It’s common for the person who created the trust (grantor) to become the trustee (manager) of a revocable trust. Then the key decision that needs to be made for a trust is choosing who will be the successor trustee.
As the grantor of the trust, you need to think through the decision of who you choose to be the trustee(s) now (if you decide not to take that position) and successor trustee(s) in the future. The trustee is an important position since that person is responsible for managing the assets in the trust and distributing the assets if that’s directed in the trust. You have to ensure you make the best choice for yourself and your family. Here are some qualities of a good trustee.
You may have heard that it’s possible to have co-trustees, but is that a good idea? In this article, we’ll take a look at the pros and cons of having two people simultaneously serving as trustees on a trust.
What Does a Trustee Do?
- Manage the property in the trust by following the directions in the trust document
- Conduct tasks include managing investments, paying bills, keeping track of records and preparing tax-related forms/filings, and distributing the assets according to the terms of the trust
- Communicate with beneficiaries to keep them informed about trust business, accounting of the trust, and any distributions
Reasons Why People Name Co-Trustees
- They believe in the idea that two heads are better than one. They can help each other think through the situation to make the best decisions.
- The creator of the trust has two adult children and doesn’t want to choose one over the other since that could cause some turmoil in the family.
- The grantor may trust a family member to be the trustee but feel they could benefit from guidance from a third party to ensure the property in the trust is managed properly.
- The belief that having two trustees takes the burden off each individual person since they are making decisions together.
The Pros of Having Co-Trustees
- With co-trustees, no one person has complete control over the trust. The two people can “keep each other honest” in regard to how the trust is being handled and make sure the trust directions are being followed. They have fiduciary responsibilities, meaning they must protect the investments and distribution of the trust.
- Co-trustees may have different skills that complement each other. Perhaps one has better communication and accounting skills while the other is more knowledgeable about managing investments.
- Sharing the responsibilities, or assigning certain tasks to each person, may help expedite the efficient administration of a trust.
- Co-trustees making decisions together may be more acceptable to the beneficiaries.
If you choose to have co-trustees, your trust needs to document whether they must always act together.
The Cons of Having Co-Trustees
- Co-trustees would have to communicate very clearly with each other to get things done efficiently. If they don’t communicate well, trust business could be delayed.
- If the trust requires the co-trustees to always act together for trust business, delays will certainly happen. For example, if they need to do all paperwork together like signing checks and the sale of real property, they will have to coordinate their personal schedules.
- Even if the trust allows co-trustees to act independently of each other, it’s possible that certain financial institutions and businesses won’t allow that; making it difficult to get things done.
- If the co-trustees disagree with each other, progress could be put at a standstill. The trust typically includes direction as to how to proceed if there is a conflict between the co-trustees, but that would delay moving forward with trust business. It could also result in hurting the relationship of the co-trustees and possibly the relationships of other loved ones as well.
- If the trustees are being compensated for managing the trust, paying two trustees will cost the trust more money.
Naming co-trustees has advantages and disadvantages. Choosing the right trustee(s) with the right qualities is just as important as having a well-drafted trust. Discussing your potential choices with a qualified Massachusetts estate planning attorney can provide greater security to your estate plan and ensure that your trust will function as you intended. Contact us today for a free consultation on trust options and asset protection strategies for you and your family.