A component of creating a trust, is naming trustees for the trust. They are given powers which include managing the trust and its assets. Trust can have a single trustee or co-trustees named. Additionally, a successor trustee is usually named. While the thought of having co-trustees may seem the fair and correct choice, there are important points to consider if naming co-trustees for a trust as the following challenges may arise.
- Personal Conflict Between Co-Trustees: Even if co-trustees appear to get along, differences in opinion can arise when managing the trust. These conflicts can cause delays, mismanagement, and hinder the trust’s effectiveness.
- Estranged Relationships: In families with strained relationships, naming estranged individuals as co-trustees may escalate existing tensions. Personal conflicts can interfere with the smooth administration of the trust.
- Lack of a Tiebreaker: Without a clear mechanism for resolving disputes, co-trustees may reach an impasse. This deadlock can delay important decisions, frustrate beneficiaries, and disrupt the trust’s objectives.
Choosing co-trustees who can work together harmoniously is essential to fulfilling the trust’s purpose and preserving your legacy. To minimize these risks, carefully assess the personalities and dynamics of potential co-trustees. Consider appointing a neutral third-party trustee or including a tie-breaker clause in the trust agreement to ensure effective decision-making.