If you have an even number of Trustees, decisions can be impossible to make if the Trustees cannot agree. You can inadvertently cause conflict in the family if you appoint siblings or family members as co-Trustees. A professional and non-professional Trustee typically creates confusion and frustration.
It can be more effective to name co-trustees instead of successor trustees because it makes it easier for them to step in if the grantor becomes incapacitated.
While in some situations it is appropriate for a sibling or other family member to serve as trustee, in many cases, particularly with a larger trust, naming a family member is not the best decision, for several reasons. First, clients fail to appreciate the amount of work involved in being a good trustee.
Yes, a Living trust is just as effective for a single person as it is for a married couple. In fact, two single persons, i.e., two siblings, can set up a Living Trust together. A Living Trust may be more important for singles than for married individuals.
What are the cons of joint trusts? Primarily, the lack of flexibility in a joint trust can be a problem, especially if the two spouses don't agree about who should ultimately be a beneficiary or how much they should receive.
A trusteeship is best handled by one person being in charge. A co-trustee would be a drag on the first. Instead of a smooth operation in the hands of one person, a second decision maker (a person probably not as competent as the first person) would always have a say, and could block or delay good decisions.
The good news is that you can select pretty much anyone you wish. The bad news is that the obvious choice may not be the best. Most people name one or more of their other children as trustees to manage things for their child with a disability.
A trustee can end up having to pay taxes out of their own personal funds if they fail to take action on behalf of the estate in a timely way. Of course, they can also face criminal liability for such crimes as taking money out of a trust to pay for their own kids' college tuition. Yup, that's stealing.
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.
Common Breaches of Trustee Duties in California. Too often, trustees breach their duties. Some of the most common ways they do this include breaches of trust, funds misappropriation, poor management, fraudulent acts, failure to act, and engagement with a competitor.
Whether it's choosing to sell a family home or deciding how much money should be distributed to a beneficiary, both co-trustees have equal authority, and both must be on the same page.
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.
What are the Pitfalls of a Co-Trustee? One of most difficult aspects of co-trustees working together is the requirement of unanimity. A majority rule does not exist for two co-trustees. The management of the trust means there must be agreement on all action taken.
With a co-trustee arrangement, the remaining trustee typically continues managing the trust if the other one has died. They handle responsibilities like maintaining property, paying taxes and distributing assets per the instructions of the trust creator.
Naming the same person as trustee and beneficiary can be problematic. Not only can it lead to a trustee and beneficiary conflict of interest, but it can make it difficult for the trustee to uphold their duty to treat all beneficiaries equally.
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.
This is a fundamental concept of trust law: the separation of legal and equitable title. In other words, while the trustee has the legal authority to manage and control the assets, they do so not for their own benefit, but for the beneficiaries.
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.
A co-trustee arrangement requires appointing two or more individuals or institutions to act together in managing the assets within your trust. A single trustee operates alone to oversee the trust.
Anyone 16 and over (18 for an Unincorporated Association or Charitable Trust) who is not 'disqualified' can be a Trustee. The reasons for disqualification were set down by the Charities Act 2011, and were designed to prevent people convicted of financial crimes, or who made serious financial errors, becoming trustees.
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.
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. Appointing family members as Co-Trustees can inadvertently generate family conflicts.
Yes, you CAN name your brother as trustee of the irrevocable trust you created for your kids. Next month marks 26 years of my being an estate planning lawyer. One of the statements I've heard repeatedly is that when you create an irrevocable gift trust, you *must* name an independent trustee.
Selecting an individual trustee
Choosing a friend or family member to administer your trust has one definite benefit: That person is likely to have immediate appreciation of your financial philosophies and wishes. They'll know you and your beneficiaries.