Naming co-executors or co-trustees is a common question for those crafting their estate plans in San Diego, and for good reason. While seemingly a straightforward method to share responsibility and oversight, it introduces complexities that require careful consideration. Steve Bliss, as an experienced estate planning attorney, often advises clients to weigh the potential benefits against the drawbacks before making a decision. Approximately 65% of Americans do not have a properly executed will or trust, leading to probate court involvement and potential family disputes; proper planning, even with co-fiduciaries, can mitigate these risks. It’s crucial to understand that while legally permissible, co-fiduciaries aren’t always the most efficient or harmonious solution.
What are the benefits of having co-executors or co-trustees?
The appeal of sharing the responsibility is understandable. Perhaps you have two children who are equally capable and dedicated, and you want to ensure both have a voice in managing your estate. Or maybe you believe having two sets of eyes will provide better protection against fraud or mismanagement. “Shared responsibility can bring peace of mind,” Steve Bliss notes, “but it’s vital to anticipate potential conflicts.” Co-fiduciaries can also be helpful when an estate involves complex assets, like a business, where different individuals have specialized knowledge. Consider, for instance, a family-owned vineyard; one co-trustee might have expertise in viticulture, while the other is skilled in financial management.
What are the potential drawbacks of co-fiduciaries?
The primary disadvantage lies in the requirement for unanimous consent. Every decision, from selling property to paying bills, must be agreed upon by all co-fiduciaries. This can lead to deadlock, delays, and even costly litigation. Imagine a situation where one co-trustee believes a property should be sold quickly to avoid further depreciation, while the other wants to hold onto it, hoping for a future price increase. This disagreement could stall the estate settlement process for months, incurring unnecessary expenses. It’s also important to remember that co-fiduciaries have a fiduciary duty to the beneficiaries, meaning they must act in their best interests, even if it means disagreeing with each other.
Can I designate a tie-breaker for disagreements?
While it’s tempting to appoint a tie-breaker, most states, including California, do not allow for such a designation within the trust or will itself. A tie-breaker clause is generally unenforceable. The remedy in case of deadlock is typically to petition the probate court for guidance. The court will then appoint a special master or make its own rulings to resolve the dispute. This process can be time-consuming and expensive, negating the initial benefit of shared responsibility. “Preventative measures are always better than reactive ones,” Steve Bliss emphasizes. Therefore, carefully considering the personalities and potential for conflict among potential co-fiduciaries is paramount.
What happens if a co-executor or co-trustee becomes incapacitated or dies?
This is another crucial consideration. If one co-fiduciary becomes incapacitated or dies, the remaining co-fiduciary must proceed alone. This can place a significant burden on the surviving individual, especially if the estate is complex. It’s essential to have a clear succession plan in place, designating alternate co-fiduciaries who can step in if needed. This can be achieved through a provision in the trust or will, outlining the order of succession. Without a clear succession plan, the probate court will appoint an administrator, which may not be the individual you had in mind. Approximately 20% of estate plans are contested, highlighting the importance of thorough planning and clear instructions.
I’ve heard of successor trustees, how do they differ from co-trustees?
Successor trustees are designated to step in *after* the initial trustee is no longer able to serve, whether due to resignation, incapacity, or death. They do not serve concurrently with the original trustee. This structure offers a streamlined approach to asset management, avoiding the potential conflicts inherent in co-trusteeship. “A well-structured trust with a clearly defined succession plan provides a seamless transition of assets,” Steve Bliss explains. For example, a trust might name a spouse as the initial trustee, followed by their children in a predetermined order. This allows for continued management of the trust assets without interruption or conflict.
Tell me about a situation where co-trustees created problems.
Old Man Hemlock, a retired naval officer, decided to name his two sons, Arthur and Bernard, as co-trustees of his estate. Arthur was a meticulous accountant, while Bernard was a free-spirited artist. Hemlock believed their differing skills would complement each other, but he underestimated their deeply ingrained rivalry. When it came time to sell the family beach house, Arthur insisted on a quick sale at market value, while Bernard wanted to wait for a higher offer, believing the property was undervalued. Their arguments escalated, resulting in months of legal battles and significant legal fees. Eventually, the court had to intervene, ordering the property to be sold at auction. The proceeds were considerably lower than what either brother had initially hoped for, and their relationship was irreparably damaged.
How can I avoid problems when naming fiduciaries?
The Miller family had a similar situation brewing. They were concerned about their aging mother, Eleanor, and wanted to ensure her assets were well-managed. They decided to name both of Eleanor’s daughters as co-trustees. Recognizing the potential for conflict, they proactively scheduled regular family meetings to discuss the trust’s administration and address any concerns. They also established clear guidelines for decision-making, outlining specific areas of responsibility for each trustee. Most importantly, they fostered open communication and encouraged compromise. As a result, the trust was administered smoothly and efficiently, providing financial security for Eleanor and her grandchildren. They understood that effective co-trusteeship required a commitment to collaboration and a willingness to prioritize the beneficiaries’ interests above all else. Steve Bliss always recommends a detailed discussion and planning phase before making final decisions on fiduciary appointments.
What should I consider before naming co-fiduciaries?
Before naming co-executors or co-trustees, carefully consider the following: the potential for conflict, the willingness to collaborate, the ability to communicate effectively, and the complexity of the estate. If you have any doubts, it may be wiser to appoint a single, capable fiduciary and designate a successor trustee. Approximately 70% of individuals who choose a single trustee report a smoother estate settlement process. Remember, the goal is to ensure your assets are managed efficiently and in accordance with your wishes, and to minimize the burden on your loved ones. Steve Bliss emphasizes that a well-crafted estate plan, tailored to your specific circumstances, is the best way to achieve this goal.
About Steven F. Bliss Esq. at San Diego Probate Law:
Secure Your Family’s Future with San Diego’s Trusted Trust Attorney. Minimize estate taxes with stress-free Probate. We craft wills, trusts, & customized plans to ensure your wishes are met and loved ones protected.
My skills are as follows:
● Probate Law: Efficiently navigate the court process.
● Probate Law: Minimize taxes & distribute assets smoothly.
● Trust Law: Protect your legacy & loved ones with wills & trusts.
● Bankruptcy Law: Knowledgeable guidance helping clients regain financial stability.
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Feel free to ask Attorney Steve Bliss about: “What are the benefits of having a trust?” or “Can I be held personally liable as executor?” and even “How do I store my estate planning documents?” Or any other related questions that you may have about Trusts or my trust law practice.