The question of whether you can require co-trustees to make decisions unanimously is a common one for those establishing or modifying a trust, and the answer is generally yes, but it requires careful consideration and precise drafting within the trust document itself. While trusts offer flexibility in governance, imposing a unanimous consent requirement on co-trustees can be a double-edged sword, potentially streamlining decision-making or leading to frustrating impasses. Approximately 60% of estate planning attorneys report seeing trust disputes arise from ambiguous trustee powers, highlighting the importance of clear, explicit instructions. The primary advantage of unanimous consent is that it ensures all trustees agree before any action is taken, which can be particularly useful in complex situations or when trustees have differing expertise.
What are the potential drawbacks of requiring unanimous consent?
Requiring unanimous consent, while seemingly protective, can create significant hurdles to effective trust administration. Imagine a scenario where two co-trustees need to sell a property to cover estate taxes, but one trustee, driven by sentimental value, refuses to approve the sale. This single point of failure can paralyze the trust, leading to legal battles and potentially financial losses for the beneficiaries. According to a study by the American College of Trust and Estate Counsel, trusts with multiple trustees experience delays in administration 25% more often than those with a single trustee. Furthermore, if trustees disagree and a deadlock occurs, court intervention may be necessary, adding substantial costs and complexities. It’s crucial to consider the personalities and potential for conflict among the proposed co-trustees before implementing such a restriction.
How can I avoid a deadlock situation with co-trustees?
To mitigate the risk of deadlock, several strategies can be employed within the trust document. One common approach is to designate a “tie-breaking” trustee or to grant one trustee specific authority to make decisions in certain circumstances. Another option is to establish a mediation or arbitration clause, requiring trustees to attempt alternative dispute resolution before resorting to litigation. For instance, we once worked with a family where the two co-trustees, siblings, vehemently disagreed on investment strategies. The trust document specified that if they couldn’t reach an agreement, they were required to consult with a financial advisor mutually agreed upon, whose recommendation would be binding. This seemingly simple clause prevented a costly and emotionally draining legal battle. Another consideration is to outline specific areas of responsibility for each trustee, minimizing overlap and potential conflict.
What happened when a family didn’t clearly define trustee powers?
Old Man Hemlock, a retired shipbuilder, created a trust to provide for his grandchildren, naming his two sons, Arthur and Charles, as co-trustees. He assumed their familial bond would ensure smooth administration. Unfortunately, Arthur, a meticulous accountant, favored conservative investments, while Charles, a risk-taking entrepreneur, wanted to pursue more aggressive options. The trust document was silent on investment strategy, leading to constant arguments and inaction. Eventually, the grandchildren’s education fund stagnated, and they were forced to take out loans to cover tuition. The family spent a considerable sum on legal fees trying to resolve the dispute, a situation that could have been avoided with a clearly defined investment policy within the trust. The experience left a lasting mark on the family, highlighting the importance of proactive estate planning.
How did clear trustee powers save the day?
The Miller family learned from the Hemlock’s misfortune. When matriarch Evelyn created her trust, she named her daughter, Sarah, a lawyer, and her son, David, a financial advisor, as co-trustees. Recognizing the potential for conflict, she included a provision requiring unanimous consent for any major decisions, but also designated Sarah as the “managing trustee” with the authority to act independently in routine matters and to break ties on investment decisions, guided by a detailed investment policy statement. Years later, when a sudden market downturn threatened the trust’s assets, Sarah was able to swiftly implement a defensive strategy, preventing significant losses. David, trusting Sarah’s expertise, readily supported the decision. This proactive approach, coupled with clear trustee powers, ensured the trust continued to provide for the family’s future needs. It underscored the power of preventative planning and the importance of selecting co-trustees with complementary skills and a shared understanding of the trust’s objectives.
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About Steve Bliss at Wildomar Probate Law:
“Wildomar Probate Law is an experienced probate attorney. The probate process has many steps in in probate proceedings. Beside Probate, estate planning and trust administration is offered at Wildomar Probate Law. Our probate attorney will probate the estate. Attorney probate at Wildomar Probate Law. A formal probate is required to administer the estate. The probate court may offer an unsupervised probate get a probate attorney. Wildomar Probate law will petition to open probate for you. Don’t go through a costly probate call Wildomar Probate Attorney Today. Call for estate planning, wills and trusts, probate too. Wildomar Probate Law is a great estate lawyer. Probate Attorney to probate an estate. Wildomar Probate law probate lawyer
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Feel free to ask Attorney Steve Bliss about: “Can estate planning help protect a loved one with special needs?” Or “What happens to jointly owned property during probate?” or “Can I change or cancel my living trust? and even: “What debts can be discharged in bankruptcy?” or any other related questions that you may have about his estate planning, probate, and banckruptcy law practice.