Choose people you can rely on to be your trustees and make sure they're happy to take on this responsibility. You should have at least two trustees but can choose up to four.
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.
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.
Co-trustees are typically family members or friends who are entrusted with the responsibility of managing and administering the trust according to the terms outlined in the trust document. The California Probate Code states that if a trust has multiple trustees, each must participate in trust administration.
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.
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.
If you are in the process of creating a family trust, you may want to choose more than one trustee for your trust. Many parents consider naming their adult children as the co-trustees. If only one child is the trustee, it could cause resentment among the other siblings.
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.
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.
Can a Trustee Change the Beneficiary? Trustees generally do not have the power to change the beneficiary of a trust. The right to add and remove beneficiaries is a power reserved for the settlor of the trust; when the grantor dies, their trust will usually become irrevocable.
The main duties of a co-trustee are to maintain and administer a trust. Depending on what assets are part of the estate plan, this could mean property management, maintaining a stock account, paying estate taxes, and more. A co-trustees's responsibilities might be specified in the will.
The short answer is yes, a beneficiary can also be a trustee of the same trust—but it may not always be wise, and certain guidelines must be followed. Is it a good idea for a beneficiary to be a trustee? There are good reasons for naming a trust beneficiary as 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.
The Law Society forum suggests that a trust can be operated by a sole trustee. So, where there are two trustees and one dies or retires or is removed through loss of mental capacity, leaving one remaining trustee, that one remaining trustee can make decisions and sign legal documents alone.
Selecting the wrong trustee is easily the biggest blunder parents can make when setting up a trust fund. As estate planning attorneys, we've seen first-hand how this critical error undermines so many parents' good intentions.
No, beneficiaries generally cannot override a trustee unless the trustee fails to follow the terms of the trust instrument or breaches their fiduciary duty. Even when a beneficiary disagrees with a trustee's actions, they typically cannot override the trustee just because they don't like their choices.
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.
Drawbacks of designating multiple executors
Sometimes people name more than one executor because they're afraid of creating conflict, but multiple individuals attempting to co-manage an estate can get a little muddy. Unless a specific provision specifies otherwise, co-executors must act in unison.
When they pass away, a successor trustee takes control of your trust. Furthermore, let's assume that you were also the trustee of a revocable trust. In this case, the successor trustee will take over the duties of the trustee, thus taking your place in terms of trust management.
People often choose Co-Trustees for various reasons, such as: Avoiding potential conflicts among adult children by appointing multiple Co-Trustees. Combining a family member's trust with a professional's expertise, balancing trust and practical guidance.
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.
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 trustee in California can withdraw money from a trust, but only under certain conditions. The authority to withdraw and use trust funds must be in accordance with the terms of the trust document and California law.