One Trustee or Two? Why More Isn't Always Better

One of the most important decisions in creating a trust is choosing who will eventually be in charge. Clients sometimes assume that naming two or more trustees is safer than naming one. It can also seem fairer. If you have three children, why put one child in charge and leave the other two out? Or perhaps one child is good with finances while another understands the family dynamics better. Why not have them work together?

Sometimes that arrangement works beautifully. But for most family trusts, I generally prefer having a single trustee in charge.

That does not mean the trustee should operate in isolation. In fact, I often encourage trustees to communicate with siblings and other family members, seek their input, and try to build consensus on important decisions. There is an important difference, however, between giving everyone a voice and giving everyone legal authority.

What Does a Trustee Actually Do?

The trustee is the person responsible for carrying out the instructions in your trust. After your death, or sometimes during your lifetime if you become unable to manage your affairs yourself, the trustee may need to collect and manage assets, work with financial institutions, sell or maintain real estate, pay bills and taxes, communicate with beneficiaries, make distributions, hire accountants and attorneys, and ultimately distribute the estate.

Those responsibilities involve real decisions, and sometimes those decisions need to be made quickly. When there is one trustee, everyone knows who is responsible. When there are multiple trustees, the lines of responsibility can become much less clear.

This is one of the central problems with co-trustee arrangements. Shared authority can sometimes result in diluted accountability. One trustee may assume the other is handling something. One may have much more information than the other. One may be actively involved while the other is largely passive. The result can be delay, confusion, and occasionally conflict.

Why Do People Choose Co-Trustees?

There are certainly legitimate reasons for wanting co-trustees. One child may understand investments while another is better at dealing with people. Parents may want checks and balances. They may also worry about hurt feelings if they select one child over another. In larger or more complicated estates, a family member may serve alongside a professional or corporate trustee.

Those are all reasonable concerns. But when a client tells me that they want co-trustees, I like to ask a more fundamental question: What are we trying to accomplish by having two people in charge?

Once we identify the objective, we can often find a simpler way to accomplish it without requiring two people to participate in every aspect of the trust administration.

What Happens When Two People Are in Charge?

Consider two siblings serving as co-trustees after their parents die. The trust owns the parents' house. One sibling wants to sell it immediately, while the other thinks the family should keep it for six months. One wants to distribute money to the beneficiaries quickly, while the other wants to retain a larger reserve for taxes and expenses. One believes a beneficiary's request for money is reasonable, while the other does not.

There does not even have to be a serious disagreement. Sometimes one sibling simply responds to emails immediately while the other takes a week. A decision that one trustee could make and implement in a day can turn into a string of emails, telephone calls, follow-ups, and requests for approval.

The same problems can arise with investments. One trustee may be comfortable with investment risk while another is extremely conservative. They may disagree about whether to retain or sell a family asset. They may interpret the trust's distribution provisions differently. Beneficiaries may even begin approaching whichever trustee they believe is more likely to give them the answer they want. These are among the practical problems identified in the materials from a recent continuing legal education program on co-trustee arrangements.

There is another issue that people sometimes overlook. Being the passive co-trustee does not necessarily mean having no responsibility. A trustee has fiduciary duties, and depending on the trust and applicable law, a co-trustee may have responsibilities concerning what another trustee is doing. 

In other words, being named co-trustee is not an honorary position. It is a real job with real responsibilities.

My Usual Preference: One Person in Charge

For a typical family trust, I generally prefer having one person with clear legal authority and responsibility to act. That person can, and often should, consult with the rest of the family.

Suppose a client has three adult children and names the oldest daughter as successor trustee. When the parents die, the trust owns the family home. Before deciding what to do with it, the daughter can talk with her siblings. She can explain the options, listen to everyone's concerns, and hopefully reach a consensus about what makes sense.

But if the family cannot agree, someone ultimately has the authority to make the decision and move the administration forward. I think that distinction is important. Everyone can have a voice without everyone having a veto.

Checks and Balances Do Not Necessarily Require Co-Trustees

Choosing a single trustee does not mean handing someone unlimited power without safeguards. There are other ways to build accountability into a trust.

The trustee can be encouraged to consult with family members and professional advisors. Beneficiaries can be entitled to information and accountings. The trust can provide mechanisms for removing and replacing a trustee. A professional trustee can be named as a backup if family members are unable or unwilling to serve. In more sophisticated situations, responsibility for certain decisions can be allocated to different people rather than simply naming two people to do everything together.

The important thing is to identify the concern first and then design the trust to address that concern.

When Co-Trustees Can Make Sense

I do not have an absolute rule against co-trustees. There are families in which two siblings have worked together their entire lives, communicate exceptionally well, and bring complementary skills to the table. There are also sophisticated trusts in which pairing a family member with a professional trustee makes sense.

When co-trustees are used, however, the arrangement should be intentional. The trust should address how decisions will actually be made. Can either trustee act independently? Must they agree? What happens when they disagree? Can responsibilities be delegated from one trustee to another? Can one trustee resign without disrupting the administration? Is there a mechanism for resolving a deadlock?

These are not merely theoretical questions. The governing trust document is ultimately the most important source of authority, and careful drafting can provide mechanisms for decision making, delegation, resolving disagreements, and removing or replacing trustees.

Being Trustee Isn't a Prize

Perhaps the biggest mistake is naming all of the children as co-trustees simply because a parent does not want anyone to feel left out.

Being trustee is not a prize or an honor that needs to be distributed equally among the children. It is an administrative and fiduciary responsibility. Naming three children as co-trustees in the interest of fairness can unintentionally make the job harder for all three of them at precisely the time when the family is dealing with the loss of a parent.

The better question is not, "How do I make this look fair?" The better question is, "Who is the best person to get this job done?"

For many families, the best arrangement is surprisingly simple. Choose one capable person to serve as trustee. Give that person clear instructions. Encourage communication with the rest of the family. Then name a strong second choice in case the first person cannot or does not want to serve.

A good estate plan should make things easier for the people you leave behind. When it comes to trustees, one really is better than two.