Co-Trustee Problems

As a Trustor, to limit trustee and co-trustee problems, perhaps it is essential to let the family know how you came up with a sole trustee’s decision. Having multiple trustees typically slows down the administration process and can inevitably stir rancor between the siblings and, ultimately, a legal battle.

 

 

Can a Co-Trustee Act Alone

As per probate code section 15620, unless otherwise provided in the trust instrument, a power vested in two or more trustees may only be exercised by their unanimous actions. If the co-trustees cannot decide, they can petition the courts (probate code 17200) to provide directions to the co-trustees.

Probate Topics, Probate Litigation 

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Trustee and Co-Trustee Problems and Disputes

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Can a co-Trustee Act Alone

So, once again, can co-Trustees act independently.? No, unless the Trust explicitly states that to be the case.

Knowing this truth, hopefully, our guide can assist in making the right decision for all parties involved.

First, whether you are the Trustee or Co-Trustee, you need to stay “reasonable” throughout the estate administration process.

Trustee vs. Co-Trustee

The role of an administrator of the Trust is to administer and distribute the assets of a Trust. The prior definition is the simplest of descriptions, yet describes the essence of the fiduciary duties. As the term describes, you have a fiduciary duty to the beneficiaries, up-and-above the Trustee or Co-Trustee wants and desires. If the Co-Trustee, for example, sees the Trustee mishandling funds, it becomes a legal issue straightaway and legitimate concern.  

The concern is the following:

  1. Beneficiaries can petition the courts for the Trustee and Co-Trustee removal
  2. Beneficiaries can sue the Trustee and Co-Trustee civilly for any loss assets
  3. Beneficiaries can push if desired for criminal misappropriation of Trust funds, i.e., embezzlement.

If you have accepted the responsibility as a Successor Trustee, it behooves you to have a heart-to-heart with your co-Trustee to set the stage for a successful outcome. 

Finally, if the Beneficiaries feel there is a breach of fiduciary duty, they can petition the court to remove one or both Trustees.  

What are the pitfalls of setting up a Trust with more than one Trustee?

There is a mindset that states to “not” have more than one Trustee. For example, let’s say there are four co-Trustees, each one would have to agree on how to manage parts of the estate and should 1 disagree, the Trust Administration stops in its tracks. At this point, there is a Trustee to co-Trustee disputes, which lead to conflicts. 

Now, as a Trustor, it sounds fair to have all your children be part of the Trust Administration process, but you are setting them up for sibling rivalry. The best practice is to base your Successor Trustee against a standard of conduct they have lived, such as financial management, credit score, patience, and many other characteristics. Why? Even the best of Trustees will be challenged at some point in the Trust Administration process. Staying balanced, maintaining bookkeeping, make hard decisions, e.g., selling or buying assets, are all fundamental aspects of a Trustee.

What causes conflict between Trustee vs. Co-Trustee?

It’s quite simple, it’s the administration of the Trust assets. People see things differently, but one thing is for sure, staying compliant with the courts, staying transparent with the beneficiaries, and keeping them reasonably up-to-date is key to a success Trust Administration process. If the Trustees cannot come to a decision, one or both Trustees can petition the court.  

Having an experienced Trust Attorney who focuses on Trust Administration is highly advisable to ensure a quality outcome.

Trustee and Co-Trustee  

What are the pitfalls of setting up a Trust with more than one Trustee?

There is a mindset that states to “not” have more than one Trustee. For example, let’s say there are four co-Trustees, each one would have to agree on how to manage parts of the estate and should 1 disagree, the Trust Administration stops in its tracks. At this point, there is a Trustee to co-Trustee disputes, which lead to conflicts. 

Now, as a Trustor, it sounds fair to have all your children be part of the Trust Administration process, but you are setting them up for sibling rivalry. The best practice is to base your Successor Trustee against a standard of conduct they have lived, such as financial management, credit score, patience, and many other characteristics. Why? Even the best of Trustees will be challenged at some point in the Trust Administration process. Staying balanced, maintaining bookkeeping, make hard decisions, e.g., selling or buying assets, are all fundamental aspects of a Trustee.

What causes conflict between Trustee vs. Co-Trustee?

It’s quite simple, it’s the administration of the Trust assets. People see things differently, but one thing is for sure, staying compliant with the courts, staying transparent with the beneficiaries, and keeping them reasonably up-to-date is key to a success Trust Administration process. If the Trustees cannot come to a decision, one or both Trustees can petition the court.  

Having an experienced Trust Attorney who focuses on Trust Administration is highly advisable to ensure a quality outcome.

Trustee and Co-Trustee

What are the pitfalls of setting up a Trust with more than one Trustee?

There is a mindset that states to “not” have more than one Trustee. For example, let’s say there are four co-Trustees, each one would have to agree on how to manage parts of the estate and should 1 disagree, the Trust Administration stops in its tracks. At this point, there is a Trustee to co-Trustee disputes, which lead to conflicts. 

Now, as a Trustor, it sounds fair to have all your children be part of the Trust Administration process, but you are setting them up for sibling rivalry. The best practice is to base your Successor Trustee against a standard of conduct they have lived, such as financial management, credit score, patience, and many other characteristics. Why? Even the best of Trustees will be challenged at some point in the Trust Administration process. Staying balanced, maintaining bookkeeping, make hard decisions, e.g., selling or buying assets, are all fundamental aspects of a Trustee.

What causes conflict between Trustee vs. Co-Trustee?

It’s quite simple, it’s the administration of the Trust assets. People see things differently, but one thing is for sure, staying compliant with the courts, staying transparent with the beneficiaries, and keeping them reasonably up-to-date is key to a success Trust Administration process. If the Trustees cannot come to a decision, one or both Trustees can petition the court.  

Having an experienced Trust Attorney who focuses on Trust Administration is highly advisable to ensure a quality outcome.

Trustee & Co-Trustee Not Getting Along

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