Co-Trustees are entitled to fees, leading to higher administration costs as more Trustees are involved. Multiple Trustees can result in delays if unanimous agreement is required before taking any action. An even number of Trustees may lead to decision-making gridlock if they cannot reach a consensus.
Naming two people to maintain an estate plan can split the workload, which can make maintaining the assets easier and more effective. Having two trustees can also protect the beneficiaries' interests. Because both trustees must agree on any course of action, it creates additional protections against poor decisions.
(b)the number of the trustees shall not be increased beyond four.
One of the biggest mistakes parents make when setting up a trust fund is choosing the wrong trustee to oversee and manage the trust. This crucial decision can open the door to potential theft, mismanagement of assets, and family conflict that derails your child's financial future.
Trusts offer amazing benefits, but they also come with potential downsides like loss of control, limited access to assets, costs, and recordkeeping difficulties.
Key aspects of trust fund syndrome include: Lack of Motivation: Individuals with trust fund syndrome may lack the drive to pursue education, careers, or personal goals because they do not need to work for financial stability.
A trustee typically has the most control in running their trust. They are granted authority by their grantor to oversee and distribute assets according to terms set out in their trust document, while beneficiaries merely reap its benefits without overseeing its operations themselves.
The problem with having two related people as trustees is that governance should be about accountability, diversity and a balance of interests, and people who live together tend to have similar views and, consequently, can sometimes shut out other people.
One of the most significant advantages of naming co-trustees is the built-in system of checks and balances. With more than one trustee, you ensure that no single individual has unchecked control over your trust.
While there's no limit to how many trustees one trust can have, it might be beneficial to keep the number low. Here are a few reasons why: Potential disagreements among trustees. The more trustees you name, the greater the chance they'll have different ideas about how your trust should be managed.
Should More Than One Successor Trustee Be Named? The decision to choose more than on Successor Trustee to serve simultaneously may be based on several factors. Often one person possess all the necessary skills to serve alone. If this is not the case, co-trustee can be appointed and trust responsibilities divided.
There must be at least two acting trustees to give a valid receipt for the sale proceeds of trust owned land. Where there is only one trustee, common practice is to appoint a second trustee on panel 11 of Form TR1 specifically for the purpose of giving valid receipt for the purchase monies.
It is not unusual for the successor trustee of a trust to also be a beneficiary of the same trust. This is because settlors often name trusted family members or friends to both manage their trust and inherit from it.
It is possible to include either one corporate trustee or up to three individual trustees. A trustee can also be a beneficiary provided that it is not the sole trustee and beneficiary. If there is another trustee, or another beneficiary as well, then it is acceptable.
If there is more than one trustee, the co-trustees can file a petition to remove one or more of their colleagues. The trust beneficiaries are entitled to challenge the trustee if they believe their inheritance is being misused or improperly disbursed.
Each member of the fund must be a trustee, and each trustee must be a member of the fund. A member cannot be an employee of another member – unless they are relatives. Some state and territory laws restrict the number of trustees a trust can have to less than 6.
Resolving Problems Among Co-Trustees
The trustees may agree to ask the court for instructions, or one trustee may appeal to the court to prevent the other trustee from acting. If disagreements happen frequently, one trustee may resign, or one may petition the probate court for removal of the other trustee.
It is usual for the settlor of the trust to retain this power or for an independent person (called an appointor) to be given the power. Statutory powers of appointment also exists in Section 36 and Section 39 Trustee Act 1925.
A trustee must abide by the trust document and the California Probate Code. They are prohibited from using trust assets for personal gain and must act in the best interest of the beneficiaries. Trust assets are meant for the benefit of the trust beneficiaries and not for the personal use of the trustee.
Experience and Knowledge. Another key consideration is whether the individual or entity is qualified to act as trustee. If the trust has substantial assets, an individual with experience managing significant assets or with a background in finance or investments may be better suited to the role of trustee.
Depending on the complexity of the case, it may cost anywhere from a few thousand dollars to $100,000 or more to dispute the terms of a trust.
Under California law, embezzling trust funds or property valued at $950 or less is a misdemeanor offense and is punishable by up to 6 months in county jail. If a trustee embezzles more than $950 from the trust, they can be charged with felony embezzlement, which carries a sentence of up to 3 years in jail.
Establishing and maintaining a trust can be complex and expensive. Trusts require legal expertise to draft, and ongoing management by a trustee may involve administrative fees. Additionally, some trusts require regular tax filings, adding to the overall cost.
While some may hold millions of dollars, based on data from the Federal Reserve, the median size of a trust fund is around $285,000. That's certainly not “set for life” money, but it can play a large role in helping families of all means transfer and protect wealth.