A trustee is responsible for administering a trust. However, what happens when there is more than one trustee involved? If you are the beneficiary of a trust with multiple trustees, you should know how all the people running your trust manage your assets.
Co-trustees are individuals who share the responsibility of managing a trust. Their dynamics can vary depending on the terms of the trust document.
Unanimous decision-making
In some cases, co-trustees must all act together. Every decision concerning the trust must be a mutual one reached by the trustees. This approach ensures that no single trustee has more power or influence than the others, helping to promote fairness and transparency. It also prevents hasty decisions that may not align with the long-term goals of the trust.
Majority vote
Alternatively, co-trustees can operate under a majority vote system. In this scenario, a majority of the trustees make the decisions. For example, if there are three co-trustees, a decision would require at least two of them to agree. This system allows for quicker decision-making but can also result in situations where the opinion of a single trustee holds more weight than the others.
Unequal power dynamics
In some trusts, there might be a lead trustee with more authority and responsibilities than the other trustees. Often, a grantor sets up a trust this way because one trustee possesses the right expertise or experience to make autonomous decisions but still needs the assistance of co-trustees.
While having a prominent trustee can streamline decision-making and provide clear leadership, power imbalances might still lead to conflicts among co-trustees. No matter the working relationship, a trustee has a fiduciary relationship with the beneficiaries of the trust, so a breakdown of performance by any trustee could lead to legal problems.
The State of Washington provides a legal framework to resolve trust conflicts and other estate disputes through the Trust and Estate Dispute Resolution Act. While a trust conflict can involve a negotiated settlement, arbitration or mediation, these methods may still consume time and money. Composing a trust document with the proper safeguards, which may include a specific dispute resolution process, may avoid legal trouble between trustees in the first place.
