Can Co-Trustees Act Independently in California?
Whether you’re considering naming two or more individuals as co-trustees in your estate plan or have been named as a co-trustee, you may wonder: Can co-trustees act independently in California? What happens if they disagree? Understanding the dynamics of co-trusteeship is crucial for ensuring a smooth and effective trust administration process.
The Basics of Co-Trusteeship
In California, a trust can have multiple successor trustees, known as co-trustees. Each co-trustee holds equal powers and shares the same fiduciary duties. 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. All of the responsibilities cannot be delegated to one co-trustee. If tasks are delegated, the remaining co-trustees must still supervise those tasks and prevent their co-trustees from breaching any fiduciary duties.
Joint Powers vs. Independent Powers
When co-trustees are designated, the trust document itself may specify whether they are to act jointly or independently. If a trust is silent on the matter, then the Probate Code default is joint powers.
If the trust states that the co-trustees must act jointly, this means they must unanimously agree on decisions related to the trust. Each co-trustee must consult the other and reach a consensus before making any decisions. Joint action can result in more balanced and informed decisions, as each trustee brings their own perspective and expertise to the table.
The downside to joint action is that co-trustees who disagree may reach an impasse which could prevent them from making decisions and moving forward in the trust administration. Mandating cooperation from co-trustees can slow down the trust administration in general, as multiple signatures will be required on legal documents.
If the trust states that the co-trustees can act independently, then each co-trustee can make decisions alone without the consent of the other co-trustees. Only one signature would be required on legal documents. Independent powers can facilitate a faster trust administration since either trustee can act independently to complete tasks. But it can also lead to conflict and distrust if one trustee acts without consulting the others or makes decisions that the others don’t support.
In cases of disagreement or conflict, co-trustees may need to take one or more of the following routes to resolve the dispute.
When disagreements arise, co-trustees should first listen to each other’s points of view, consider the opinions shared, and attempt to negotiate a compromise.
If co-trustees cannot resolve their disagreements on their own, they may consider hiring a professional mediator to help facilitate a resolution. Mediation can be a cost-effective and less adversarial alternative to litigation.
When co-trustees cannot resolve their disputes through other methods, they may need to seek court intervention. A judge can make decisions that are in the best interest of the trust beneficiaries and can even remove a co-trustee if necessary.
Alternatives to Appointing Co-trustees
Parents sometimes feel obligated to appoint multiple children as co-trustees in an attempt to be fair. For example, if your oldest child tends to dominate the other siblings, you may think you can solve this dynamic by naming all three of your adult children as co-trustees.
But this strategy often backfires. If your adult children struggle to get along now, it’s probably unrealistic to expect them to cooperate in a future trust administration.
Instead, parents should consider naming a professional fiduciary as their successor trustee. A seasoned, unbiased professional with experience administering estates can provide valuable services and help preserve familial relationships between adult children.
Seek Legal Counsel
Co-trustees in California navigate a complex landscape where the balance between independence and collaboration is crucial. Understanding the provisions of the trust document, the nature of trust assets, and the dynamics among co-trustees and beneficiaries is essential for effective trust administration.
While independence is possible in certain contexts, the overarching principle should always be the best interests of the beneficiaries, ensuring that the trust fulfills its intended purpose.
If you’re creating a trust and wondering whether you should appoint multiple co-trustees, seek the counsel of an experienced estate planning attorney. If you’re a co-trustee, be sure to consult with an experienced trust administration attorney for guidance throughout the trust administration process.
If you have any questions about this topic, feel free to contact our law firm.
Law Offices of Daniel A. Hunt
The Law Offices of Daniel A. Hunt is a California law firm specializing in Estate Planning; Trust Administration & Litigation; Probate; and Conservatorships. We've helped over 10,000 clients find peace of mind. We serve clients throughout the greater Sacramento region and the state of California.