Pitfalls of Naming Cotrustees

The reason many folks want to name cotrustees comes from a thoughtful and caring place. But naming cotrustees can create problems instead of avoid them. Consider the following two reasons why naming
cotrustees can ultimately prove to be a bad idea.

• People often think naming cotrustees is a good idea because they don’t want to appear as if they’re favoring one person (usually a child) over another. Unless the trust instrument specifically directs otherwise, cotrustees must act unanimously. If cotrustees can’t reach an agreement, they may end up having to file a petition asking the probate court to decide what happens next. This takes time, costs money, and can cause emotional rifts between the players to widen and deepen. Or even worse, one cotrustee takes unilateral action that the other cotrustee disagrees with and ends up having to file a petition asking the probate court to straighten things out.

• Other people name cotrustees because they don’t want to burden one person with all of the administration responsibilities. But in California, unless the trust instrument specifies otherwise, cotrustees can’t delegate their fiduciary responsibilities to each other (or to anyone else) except for investment and management functions. And even when specific duties are properly delegated, each trustee is still legally responsible for exercising general supervision over the trust’s administration.

Who to name as successor cotrustee is one of the most important decisions that must be made to prepare an estate plan. We believe that knowledge is power, and our goal is to help each and every one of our clients make informed decisions throughout the estate planning process.

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