Should You Name One or Multiple Children as Co-Successor Trustees?

Understanding the Role of a Successor Trustee

A successor trustee is much like the general manager of a business.  They are responsible for managing your trust’s assets, ensuring that your wishes are carried out as specified in the trust document. This role includes a variety of duties, such as:

1. Managing and investing trust assets.
2. Paying debts and taxes.
3. Distributing assets to beneficiaries according to the trust terms.
4. Maintaining records and providing reports to beneficiaries.

Given the responsibilities, the choice of a successor trustee is pivotal. You need someone trustworthy, capable, and willing to take on these duties.

Pros and Cons of Naming Your Children as Co-Successor Trustees

Pros

1. Shared Responsibility:
   • Naming multiple children as co-successor trustees can spread the responsibility and workload, making the task less burdensome for a single individual.
2. Checks and Balances:
   • With multiple trustees, there is a system of checks and balances. This can help prevent unilateral decisions that may not align with the best interests of all beneficiaries.
3. Family Unity:
   • Involving multiple children can foster a sense of family unity and shared purpose, as they work together to manage the trust.
4. Mutual Support:
   • Co-trustees can support each other emotionally and practically, which can be especially beneficial during the difficult period following your passing.

Cons

1. Potential for Conflict:
   • Disagreements among co-trustees can lead to delays, inefficiencies, and even litigation. Differing opinions on how to manage and distribute assets can create significant friction. This is why many financial institutions will not work with trusts where the trustees do not have independent unilateral authority over the trust.
2. Decision-Making Challenges:
   • Requiring consensus or majority approval for decisions can complicate and slow down the process. In urgent situations, this could be problematic.
3. Complex Administration:
   • Coordinating actions among co-trustees can be complex, particularly if they live in different locations or have different levels of understanding of trust management.
4. Strain on Relationships:
   • The pressure and disagreements related to trust administration can strain relationships between siblings, potentially leading to long-term familial discord.

Pros and Cons of Naming a Single Successor Trustee

Pros

1. Clear Decision-Making:
   • A single trustee can make decisions more swiftly and efficiently without needing to consult others, which can streamline trust administration.
2. Avoidance of Conflict:
   • By appointing one trustee, you eliminate the potential for disputes between co-trustees. This can lead to a more harmonious execution of your wishes.
3. Simplified Administration:
   • The administrative process tends to be simpler and more straightforward with a single trustee, reducing the risk of errors and miscommunications.
4. Focused Accountability:
   • With one person responsible, there is clear accountability for the management of the trust. This can ensure that your wishes are carried out faithfully and accurately.

Cons

1. Heavy Burden:
   • The sole trustee bears all the responsibility, which can be overwhelming. This is especially true if the trust is complex or if the trustee has other significant obligations.
2. Lack of Checks and Balances:
   • A single trustee lacks the internal oversight that co-trustees can provide, which could potentially lead to mismanagement or abuse of power.
3. Potential for Resentment:
   • Other children might feel excluded or slighted if only one sibling is named as trustee, leading to family tension or resentment.
4. Risk of Unavailability:
   • If the single trustee becomes incapacitated or otherwise unable to serve, it can create complications and delays in trust administration.

Key Considerations in Your Decision

1. Trustee Competence and Reliability

Assess the competence, reliability, and willingness of your children to serve as trustees. Consider their financial acumen, organizational skills, and ability to handle complex tasks.

For instance, if one child is a financial planner while another has no interest or experience in finance, the former might be better suited for the role of trustee.

2. Family Dynamics

Reflect on the dynamics within your family. Are your children likely to collaborate effectively, or are there underlying tensions that could escalate if they must work together as co-trustees?

In a family where siblings have a history of rivalry or conflict, naming them as co-trustees could exacerbate these issues. Conversely, if your children have a history of working well together, co-trusteeship might strengthen their bond.

3. Geographical Proximity

Consider the geographical proximity of your children. If they live far apart, coordinating as co-trustees can be challenging. A single trustee might be more practical if they are local and can manage the trust more easily.

For example, if one child lives nearby and can easily handle administrative tasks, they might be a more practical choice than a sibling living across the country.

4. Complexity of the Trust

The complexity of your trust and the nature of the assets involved should influence your decision. For simpler trusts, a single trustee may be sufficient. For more complex arrangements, multiple trustees might be beneficial.

A trust holding various business interests, real estate, and investments might benefit from co-trusteeship to leverage diverse expertise, whereas a simple cash trust might not require such complexity.

5. Professional Assistance

You might consider appointing a professional trustee, such as a trust company or a financial institution, to serve alongside or instead of your children. This can provide expertise and impartiality, though it comes with additional costs.

For instance, a professional trustee can manage complex assets and mediate disputes, providing a layer of expertise and neutrality that can be invaluable in contentious situations.

6. Clear Instructions

Whether you choose one or multiple trustees, providing clear instructions and guidelines in your trust document is crucial. This can help prevent misunderstandings and ensure your wishes are followed.

Detailed instructions on how assets should be managed and distributed can mitigate disputes and ensure that your trustees clearly understand their responsibilities.

Practical Steps to Implement Your Decision

Discuss with Your Children

Have an open and honest discussion with your children about your plans and their willingness to serve as trustees. Their input can be invaluable in making your decision. Just remember, that when a parent passes, there is a very high likelihood that the kids will fight with each other over something. Not too indifferent from when they were in grade school.  It may be something big, small, or something in between. Nonetheless, without the parents there, there is typically no mediator to resolve the bickering that will undoubtedly occur.

Open communication is the key to prevent most of these issues.  Understanding their perspectives and potential concerns can help you make a choice that balances your wishes with their capacities and interests.

Consult with an Estate Planning Attorney

Work with an experienced estate planning attorney to draft or revise your trust document. They can help you navigate the legal complexities and ensure your trust is structured effectively. Our attorneys at Filippi Law Firm can create an estate plan designed for your unique needs.

An attorney can provide guidance on legal requirements, potential pitfalls, and strategies to ensure your trust functions smoothly and according to your intentions.

Consider a Trust Protector

A trust protector is an independent third party who oversees the trustees and can intervene if necessary. This can add an extra layer of oversight and protection for your trust.

Appointing a trust protector can be especially useful if you have concerns about potential conflicts or mismanagement, as they can step in to resolve issues and ensure the trust is administered correctly.

Periodic Review

Regularly review your trust and the trusteeship arrangement. Changes in family circumstances or the competence of your trustees might necessitate adjustments.

Life events such as marriages, divorces, births, or changes in your children’s capabilities or locations might impact the suitability of your chosen trustees, so periodic reviews can ensure your trust remains aligned with your wishes and family dynamics.

At Filippi Law Firm, we are here to assist you with all aspects of estate planning. Our experienced attorneys can provide you with the knowledge and support you need to fulfill your trustee duties with confidence. Contact us today to learn more about how we can help you manage your responsibilities as a trustee effectively. Call (916) 333-7910 or fill out the contact form at the bottom of this page.

Filippi Law Firm, P.C., provides legal services in estate planning, probate, trust administration, and trust litigation in the greater Sacramento area and Placer County, with a focus in Rocklin, Roseville, Lincoln, and Granite Bay. Consultations are free, and they can be done over the phone, via Zoom, or in-person at our office in Rocklin.