Co Trustee Disputes

Trustee and Co-Trustee Problems and Co-Trustee Disputes

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.

What happens if trustees disagree

In California, co-trustees in dispute can seek judicial assistance by filing a petition for instructions in Superior Court. This legal measure requests the judge to offer guidance on the conflict, helping to direct co-trustee actions according to the trust’s terms and California law.

What happens when co-trustees disagree

When co-trustees disagree in California, they can seek legal remedies. One common approach is to file a petition for instructions, asking a Superior Court judge to provide guidance and resolve the conflict.

Trustee vs. Co-Trustee

The role of an administrator of the Trust is to administer and distribute the assets of a Trust. This encapsulates the fiduciary duties, wherein trustees owe a duty to the beneficiaries above their own desires. If a Co-Trustee observes mishandling of funds by the Trustee, it becomes a legitimate legal concern.

When Co-Trustees Disagree

Co-trustees can seek legal recourse when disagreements arise. In California, they may file a petition for instructions with the Superior Court, seeking guidance to resolve conflicts and ensure adherence to the trust’s terms.

The Concern

1. Beneficiaries have the right to petition for the removal of both Trustee and Co-Trustee.
2. Beneficiaries can file civil suits against Trustees for any loss of assets.
3. If necessary, beneficiaries can pursue criminal charges for misappropriation of Trust funds, such as embezzlement.

If you’ve accepted the responsibility as a Successor Trustee, it’s crucial to communicate effectively with your co-Trustee to ensure a successful outcome. Additionally, beneficiaries can petition the court to remove one or both Trustees if they perceive a breach of fiduciary duty.

What are the Pros and Cons of co trustees?

The pros and cons of co-trustees are summed up as the following: The pros are more transparency to the trust administration process, but the cons may outweigh any pros because of the inherent issues of trustee and co-trustee disputes.

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.

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.