When creating a trust, one of the most important decisions you will make is choosing who will manage it when you are no longer able to do so yourself. For parents with multiple adult children, an apparently simple solution often comes to mind: name two or more children as co-trustees.
It can feel like the fairest choice. No child is singled out, everyone has a role, and siblings can theoretically work together to carry out their parents’ wishes.
In practice, however, serving as co-trustees can be more complicated. Differences of opinion, geographic distance, administrative requirements, and existing family dynamics can make trust administration difficult at exactly the time a family is already dealing with illness or loss.
That doesn’t mean you should never name adult children as co-trustees. For some California families, it can work very well. The key is understanding what the role involves and choosing trustees based on their ability to do the jobโnot simply on a desire to treat children equally.
What Does a Trustee Actually Do?
A trustee is responsible for administering the assets held in a trust according to its terms and applicable law. Parents who establish a revocable living trust commonly serve as their own trustees while they are alive and capable of managing their affairs. They then name one or more successor trustees to take over if they become incapacitated or after they die.
The job can involve much more than distributing an inheritance.
Depending on the trust and its assets, a trustee may need to:
- Locate and safeguard trust property
- Manage bank and investment accounts
- Maintain or sell real estate
- Pay expenses and debts
- Keep appropriate records
- Obtain appraisals or other professional assistance
- Address tax matters
- Communicate with beneficiaries
- Make distributions according to the trust
- Resolve questions or disputes concerning trust administration
California trustees also have fiduciary obligations. A trustee generally must administer the trust according to its terms, act in the interests of the beneficiaries, appropriately manage trust property, and keep beneficiaries reasonably informed as required by law.
It is a significant legal and financial responsibility, not simply an honorary family position.
What Happens When You Name Co-Trustees?
Co-trustees share responsibility for administering the trust.
Exactly how decisions are made can depend on the trust document and California law. A carefully drafted trust can provide instructions addressing the authority of multiple trustees and how certain decisions should be handled.
This makes the drafting stage particularly important.
Parents shouldn’t assume their children will simply “figure it out” later.
Before naming co-trustees, consider whether the people you are choosing could realistically make financial and administrative decisions together during a stressful period.
The Advantages of Naming Adult Children as Co-Trustees
There are circumstances in which naming siblings as co-trustees can work extremely well.
Different Children May Bring Different Strengths
Perhaps one child is highly organized and comfortable handling financial matters, while another knows more about the family’s real estate or understands the needs of other family members.
Working together can allow them to combine those strengths.
For example, one sibling might be comfortable communicating with accountants and financial institutions while another lives near the parents’ home and can oversee property maintenance and personal belongings.
Co-Trustees Can Provide Checks and Balances
Trust administration can involve significant financial decisions. Having more than one person involved may provide an additional layer of accountability.
Co-trustees can discuss major decisions, review records, and help ensure that one individual isn’t carrying the entire burden.
It May Reduce Perceptions of Favoritism
Some parents worry that naming one child as trustee will hurt the feelings of the others.
Naming children together can communicate that the parents trust each of them and want them involved.
However, avoiding hurt feelings shouldn’t be the primary reason for selecting co-trustees. Fairness in an estate plan doesn’t necessarily require giving every child the same administrative role.
The Potential Problems with Co-Trustees
The arrangement also comes with significant disadvantages that families should consider.
Siblings May Disagree
Two siblings who get along well during their parents’ lifetime may discover that administering an estate together is very different.
Questions can arise over issues such as:
- When to sell the family home
- What price to accept for property
- How personal belongings should be handled
- Which professionals to hire
- How quickly distributions should be made
- How trust expenses should be handled
If one sibling wants to sell a parent’s home immediately while another wants to keep it in the family, for example, the disagreement can become both financial and emotional.
Existing sibling tensions can become much more pronounced after a parent’s death.
Routine Administration Can Become More Complicated
Trust administration involves paperwork. Banks, investment companies, title companies, accountants, attorneys, and other institutions may need trustee signatures or authorization.
When multiple trustees are involved, routine tasks can sometimes require additional coordination.
That may not be difficult when siblings live nearby and communicate regularly. It can be much harder when one lives in Pasadena, another lives across the country, and both have demanding careers and families of their own.
Decision-Making Can Slow Down
One advantage of naming a single trustee is that the person can make decisions within the authority granted by the trust without continually coordinating with a sibling.
Co-trustees may need to communicate before taking action. If they disagree or one person is difficult to reach, administration can take longer.
Delays can become especially problematic when the trust owns property that needs immediate attention or when expenses and tax deadlines must be addressed.
Family Relationships Can Affect Financial Decisions
Trustees are fiduciaries. Their decisions shouldn’t be based simply on personal preferences or old sibling disagreements.
Imagine three children who will ultimately inherit equally, but two are serving as co-trustees. If the third sibling disagrees with their decisions, the arrangement may create a feeling that two children have control over the third child’s inheritance.
Even when the trustees are acting appropriately, poor communication can create suspicion and resentment.
Should You Name Just One Child Instead?
For some families, naming one capable adult child as successor trustee is the simplest option.
The best candidate is not necessarily the oldest child or the child who lives closest to you.
Instead, consider qualities such as:
- Financial responsibility
- Organization
- Reliability
- Good judgment
- Ability to communicate
- Willingness to follow instructions
- Ability to remain neutral during family disagreements
You can also name another child as an alternate trustee if the first person cannot or does not want to serve.
Naming one child as trustee does not mean you love or trust your other children less.
The trustee’s role is a job, and estate planning decisions should reflect who is best equipped to perform it.
When Might a Professional Trustee Make Sense?
There are situations in which parents may decide that none of their children should be responsible for administering the trust.
Depending on the circumstances, a professional fiduciary or qualified institutional trustee may be an option.
Professional administration may be worth considering when:
- Siblings have a history of conflict
- The trust contains substantial or complicated assets
- A family business is involved
- Beneficiaries have competing interests
- A trust will continue for many years
- A beneficiary requires ongoing financial management
- Parents don’t want one child placed in authority over another
A professional trustee can provide neutrality and experience, although professional services come with fees that should be considered when developing the estate plan.
Consider the Emotional Burden, Too
Parents sometimes focus on whether a child can serve without asking whether that child should have to serve.
Administering a parent’s trust can occur while that person is grieving, handling funeral arrangements, helping other family members, managing a career, and caring for children of their own.
For a complicated estate, trusteeship can become a significant commitment.
Talk with the person you intend to nominate before finalizing your plan. Make sure they understand what the role could involve and are comfortable accepting the responsibility.
Your Trustee Choice Doesn’t Have to Be Permanent
Another reason to review your estate plan periodically is that the right trustee today may not be the right trustee ten years from now.
Your children’s circumstances can change. They may move, develop demanding careers, experience health problems, face financial difficulties, or simply decide they are not comfortable serving.
Your family relationships and assets may change as well.
Regular estate plan reviews allow you to reconsider your successor trustees and make changes while you are able to do so.
Choosing What’s Best for Your Family
There is no universal rule that California parents shouldโor should notโname their adult children as co-trustees.
For siblings who communicate well, respect each other’s judgment, and bring complementary skills to the role, serving together may work successfully. For other families, naming multiple trustees can introduce unnecessary delays and conflict.
The goal should not be to make every child feel equally included. The goal is to create an arrangement that allows your trust to be administered efficiently and according to your wishes.
An experienced California estate planning attorney can help you evaluate potential trustees, anticipate areas of conflict, and draft your trust to provide clear instructions about how it should be administered.
For families in Pasadena and throughout Southern California, Pasadena Law Group can help create an estate plan designed around your assets, your relationships, and the people you want to protect.
Thoughtful trustee selection today can make administering your estate significantly easier for your family tomorrow.
