When multiple individuals are designated as co-trustees of a trust, it introduces the potential for disagreements regarding the administration of the trust assets. While the intention behind co-trusteeship is often to provide checks and balances and incorporate diverse perspectives, conflicting opinions can lead to deadlock, hindering the trustee’s ability to fulfill their fiduciary duties to the beneficiaries. This is a common issue, and Steve Bliss, an experienced Living Trust & Estate Planning Attorney in Escondido, frequently advises clients on strategies to mitigate these risks during the trust creation process, but also on how to resolve disputes if they arise. Approximately 25% of trust disputes involve disagreements between co-trustees, highlighting the need for proactive planning and clear communication protocols.
Can a trust outline a tie-breaking mechanism?
A well-drafted trust document can, and should, anticipate potential disagreements between co-trustees. One common solution is to designate a “tie-breaking trustee” – an individual who has the authority to make final decisions when co-trustees reach an impasse. This individual could be a neutral third party, such as an attorney or financial advisor, or a trusted family member. Alternatively, the trust can specify a process for mediation or arbitration, where a neutral facilitator helps the co-trustees reach a mutually agreeable solution. In California, a court can intervene if co-trustees are unable to resolve their differences and the beneficiaries’ interests are being harmed. It’s crucial to remember that inaction due to disagreement is a breach of fiduciary duty, potentially exposing the co-trustees to personal liability.
What happens if co-trustees can’t agree on investments?
Investment decisions are often a primary source of conflict between co-trustees. One trustee might favor conservative, low-risk investments to preserve capital, while another might prefer more aggressive, growth-oriented strategies. The trust document should provide clear guidance on the investment philosophy and acceptable risk tolerance. According to a recent study by the American Bar Association, approximately 40% of trust litigation stems from investment disputes. If the document is silent on this matter, co-trustees should strive to reach a compromise that aligns with the beneficiaries’ needs and the overall objectives of the trust. Failure to do so could result in accusations of imprudence or breach of duty. “A diversified portfolio, carefully constructed to match the beneficiary’s time horizon and risk tolerance, is often the most prudent approach,” explains Steve Bliss.
I recall a family struggling with this exact problem…
Old Man Hemmingson had a trust, with his two sons as co-trustees. He’d left everything to be divided equally between his grandchildren, but the sons loathed each other. From the moment their father passed, they were at each other’s throats. One son wanted to liquidate all assets and distribute cash immediately, believing the grandkids needed it now. The other insisted on long-term investments to maximize growth for future generations. Months turned into years of legal battles, endless filings, and dwindling trust assets eaten away by attorney’s fees. The grandchildren, who were supposed to be the beneficiaries, saw almost nothing for a long time, and the family became incredibly fractured. It was a sad example of how disagreement, unchecked, can utterly destroy the purpose of a trust.
How can proactive planning prevent these problems?
Luckily, the Thompson family learned from the Hemmingson’s mistakes. Mrs. Thompson, a forward-thinking woman, had designated her daughter as the primary trustee and her son-in-law as the co-trustee, but with a clear stipulation: if they disagreed on any significant decision, a panel of three independent financial advisors would cast the deciding vote. When a dispute arose regarding the sale of a rental property, the panel quickly reviewed the financial projections and determined the sale was in the best interests of the beneficiaries. The decision was swiftly implemented, and the funds were distributed without further conflict. This proactive approach, prioritizing clear communication and a pre-defined resolution process, ensured the trust fulfilled its intended purpose, providing financial security for future generations. Steve Bliss consistently recommends this type of contingency planning to all his clients establishing trusts, recognizing that anticipating potential conflicts is the best way to protect the beneficiaries and preserve family harmony.
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About Steve Bliss at Escondido Probate Law:
Escondido 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 Escondido Probate Law. Our probate attorney will probate the estate. Attorney probate at Escondido Probate Law. A formal probate is required to administer the estate. The probate court may offer an unsupervised probate get a probate attorney. Escondido Probate law will petition to open probate for you. Don’t go through a costly probate call Escondido Probate Attorney Today. Call for estate planning, wills and trusts, probate too. Escondido Probate Law is a great estate lawyer. Affordable Legal Services.
My skills are as follows:
● Probate Law: Efficiently navigate the court process.
● Estate Planning 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.
● Compassionate & client-focused. We explain things clearly.
● Free consultation.
Services Offered:
- living trust
- revocable living trust
- irrevocable trust
- family trust
- wills and trusts
- wills
- estate planning
Map To Steve Bliss Law in Temecula:
https://maps.app.goo.gl/oKQi5hQwZ26gkzpe9
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Address:
Escondido Probate Law720 N Broadway #107, Escondido, CA 92025
(760)884-4044
Feel free to ask Attorney Steve Bliss about: “Are handwritten wills legally valid?” Or “What happens to jointly owned property during probate?” or “How much does it cost to create a living trust? and even: “How much does it cost to file for bankruptcy?” or any other related questions that you may have about his estate planning, probate, and banckruptcy law practice.