Pro-Tip:
Most financial and healthcare institutions do not accept or acknowledge the validity of ‘and/or’ regarding co-successor trustees working together or independently. Therefore, we will NOT use this language. For more information on successor trustees working together, please refer to the article below on the pros and cons of multiple successor trustees working together.
Multiple Trustees Acting Together
Having multiple trustees in an estate plan can offer certain advantages, but it also comes with potential disadvantages. The appropriateness of having multiple trustees depends on the specific circumstances, dynamics among trustees, and the goals of the estate plan. We will review both; before we do, please keep in mind that we are starting with disadvantages here as most Trustors chose to have one Trustee serve at a time after looking over the disadvantages.
Disadvantages:
Decision-Making Challenges:
Disadvantage: Disagreements among trustees can lead to challenges in decision-making. Conflicting opinions or differing priorities may hinder the efficient administration of the trust.
Complex Coordination:
Disadvantage: Coordinating the actions and decisions of multiple trustees can be complex. It may require effective communication and collaboration, which can be challenging, especially if trustees are geographically dispersed.
Delays in Administration:
Disadvantage: With multiple trustees, obtaining unanimous agreement on decisions may lead to delays in trust administration. This could impact the timely distribution of assets or implementation of the trust's terms. Financial institutions will require all trustees to sign off on things physically!
Potential for Conflict:
Disadvantage: Family dynamics or conflicting interests among trustees may lead to disputes, making it difficult to reach a consensus on important matters related to the trust.
Administrative Costs:
Disadvantage: Multiple trustees may result in increased administrative costs. Each trustee may have separate fees or expenses, potentially reducing the overall value of the trust assets. *Most friends and family members who serve as successor trustees opt not to collect fees for their administrative services.
Succession Planning:
Disadvantage: Planning for the succession of trustees can be more complex when there are multiple trustees. Explicit provisions for the appointment of successor trustees are essential to avoid disruptions.
Advantages:
Distributed Responsibilities:
Advantage: Multiple trustees allow for the distribution of responsibilities. Each trustee can focus on specific aspects of trust administration, leading to more efficient management of the trust.
Expertise and Skills:
Advantage: Different trustees may bring diverse expertise and skills to the administration of the trust. This can be beneficial, especially if the trust involves complex financial, legal, or business matters.
Checks and Balances:
Advantage: Multiple trustees can provide a system of checks and balances. This helps prevent abuse of power and ensures that decisions are made collectively, reducing the risk of errors or conflicts of interest.
Continuity of Administration:
Advantage: If one trustee cannot fulfill their duties due to incapacity, resignation, or other reasons, the remaining trustees can continue to administer the trust, ensuring continuity. This would apply whether successor trustees are required to work together or not, and is why listing three or more successor trustees is suggested.
Family Dynamics:
Advantage: In family situations, having multiple trustees may help mitigate potential conflicts by involving several family members in decision-making, potentially promoting transparency and fairness. Some blended families find this highly useful and ask an adult child from each parent to serve together as co-trustees.
In summary, considering the grantor's specific circumstances and objectives, the decision to have multiple trustees in an estate plan should be carefully considered. Communication, trust, and a well-defined structure for decision-making are crucial to managing the potential challenges associated with multiple trustees. Consulting with Estate Planning and Financial Professionals can provide valuable guidance in tailoring an estate plan to address the unique needs of the individual or family involved.