For many individuals, a detailed estate plan consists of one or more trusts. Trusts offer numerous advantages such as versatility, control and both tax and probate avoidance in many cases. Although there are a wide array of trusts that you can select from when you decide to develop a trust, all trusts need the same basic elements to start– a recipient, a trustee and funds.
When deciding who to designate as trustee, you may think about designating co-trustees, but is this actually a smart idea? Just you can make that decision, there are some things you may want to consider prior to making the decision.
Estate planning guidelines normally allow you to call anyone you wish as trustee and do not limit you to naming just one trustee. For this reason, individuals typically consider naming more than one trustee. If, for example, you have more than one child you may be concerned that naming one child as trustee will develop a family rift. While naming two kids may avoid this, it can cause conflict within the trust itself. When there are two trustees that can not agree with each other, important decisions might end up in a deadlock. If you feel that it is essential to include more than one trustee in your trust, think about naming 3 rather of 2 so that decisions can be made by a majority vote. Or appoint a trust consultant, somebody who is independent and can be hired to break a tie vote and carry out numerous other functions where independence is desired. This is also described as a special trustee.
Of course, another choice is merely to appoint one neutral trustee instead of including family members. This could be an attorney or an expert trustee. By selecting a neutral trustee, not just do you avoid creating conflict within the family, however you have someone who is not mentally thinking about the result of trust decisions supervising those decisions. This prevents both dispute within the family and a conflict of interest with any decisions made regarding the trust itself. Be sure to talk with your estate planning lawyer before you make a choice regarding who to appoint as the trustee, or co-trustees, of your trust.