CO-TRUSTEE

What is a co-trustee?

A co-trustee is one of multiple trustees serving simultaneously, typically with equal powers and duties. They share the responsibility of managing the trust’s assets. Sometimes, a co-trustee can temporarily step in if the primary trustee is unavailable, such as during an illness.

Trusts are created by property owners, aka grantor, trustor, or settlor. A property owner can be one individual or many, in the case of joint ownership. The trustor puts the property in the trustee’s hands to control the assets to benefit named beneficiaries. Most trusts name the grantor as the trustee. But it will be unwise to leave them as the sole trustee, so other people or entities are included as co-trustees. A co-trustee is a joint trustee.

If you are a co-trustee, and having co-trustee disputes, call Hess-Verdon & Associates at 888-318-4430. Trusted across the state of California.

Co-trustee duties

Co-trustees jointly manage the trust’s assets. It’s paramount they know the extent of their powers over the assets. Trusts often include instructions that every trustee of a trust should follow. Everything should be done in the best interest of the named beneficiaries. Do trustees have to act jointly? Yes, they do! (Unless the trust states otherwise)

Furthermore, co-trustees must act collectively unless the trust explicitly grants certain responsibilities to a specific trustee. But even so, co-trustees should not act without the knowledge and full consent of fellow trustees. Questions are always asked do both co-trustees have to sign and the answer is Yes. A co-trustee cannot act alone.

A trust document should also clearly state the authority of joint trustees. Trustees who have objections to the decisions or actions of fellow trustees have the right to put in writing and file a petition in the courts to try and stop the trustee. That way, they are covered from any legal liability from the actions and decisions of the other trustee.

co-trustee vs trustee

Co-trustees must jointly sign forms, unless the trust specifies they can act independently. This contrasts with a sole trustee who acts alone. Both co-trustees and trustees are tasked with trust management and administration, but co-trustees share the responsibility.

co-trustee meaning

A co-trustee is one of two or more individuals or entities jointly responsible for managing a trust’s property and assets on behalf of another person or organization.

Co-trustee vs successor trustee

While a living trust may have a single trustee, a successor trustee is designated to assume trust administration in the event the original trustee is unable to serve.

Power to control assets in the trust

Trustees are in charge of the grantor’s assets. The trust document may explain how the assets should be administered; however, in most cases, trustees are allowed the discretion to control and manage the asset as their experience dictates as long as it’s for the good of beneficiaries. For example, trustees can set up or close bank accounts, invest in particular stocks, sell or buy properties, etc… Still, they must record and inform the beneficiaries every step of the way.

Administer the trust

In the case of a living trust, the grantor should clearly state how assets are distributed, to whom, and when. The co-trustee will be in charge of distributing the trust’s assets as the grantor wishes.

Tax filing and settling legal debts

A co-trustee may also make arrangements to settle any tax arrears owed by the property in the trust. Taxes applicable on trust assets may include income and estate taxes. The co-trustee will file the applicable taxes with the relevant tax authorities. The money may come from the trust. Apart from taxes, the co-trustee may also arrange for the settlement of legal debts and any claims against items in trust. They may work with accountants and tax attorneys.

Co-trustee vs. successor trustee

If you’ve been named a successor trustee, you can breathe easily. Successor trustees are not the same as a co-trustees. Co-trustees duties are immediate, while a successor trustee waits until the trustee is incapacitated or dies to begin acting. However, that doesn’t mean you shouldn’t learn your responsibilities just yet. As a successor trustee, you will be responsible for:

• Trustor’s financial affairs
• Making sure the trustor is getting quality care
• Notify grantor’s family, friends, and work of their condition
• Keep records of medical expenses, file medical claims, and apply for benefits
• Notify co-trustees
• File taxes and settle legal debts and claims
• Collect death benefits
• Administer assets to beneficiaries according to grantor’s instructions

How is a successor trustee appointed?

As a successor trustee, you can be appointed under a trust deed or a trust relationship. Usually, it is mortgage companies that use trust deeds. They put a title company as the original trustee, but then they name a foreclosure company or attorney as successor trustee in the event of foreclosure.

On the other hand, an appointment under a trust relationship follows guidelines stipulated in the trust agreement. If there are no guidelines, beneficiaries can petition the court to appoint a successor trustee.

How to protect your legal rights

Do you need help figuring out your duties and responsibilities as a co-trustee or successor trustee? Give us a call today. Trustees can hire attorneys  to help them navigate the complex side of trust management and administration so they don’t get into legal problems. Are you a corporate trustee? Give us a call today to find out how we can be of service!