A trust is one of the most effective and widely used estate planning tools available today. Through a trust, you can manage, protect, and distribute your assets according to your wishes, both during your lifetime and after your death. One of the most significant decisions you will make when creating a trust is deciding who should serve as Trustee. Some Grantors (the creator of a trust) choose to name more than one person to act in the role of Trustee which can make trust administration more efficient and balanced; however, it can also create complications. To help you make the best choice for your trust, the attorneys at Wilcox Attorneys, PA discuss the potential advantages and disadvantages of appointing Co-Trustees for your Arkansas trust.
Understanding the Role of a Trustee
Before deciding whether to appoint Co-Trustees, it is helpful to understand what a Trustee does during the administration of a trust. A trust is a legal relationship that involves three primary parties, including the Grantor (the person who creates the trust), the Trustee (the person or institution responsible for managing it), and the Beneficiary (the person or people who benefit from it). The Trustee serves as a fiduciary, meaning that he or she has a legal and ethical duty to act in the best interests of the beneficiaries at all times.
Trusts are generally divided into two main types: living trusts and testamentary trusts. A living trust is established and managed during your lifetime, while a testamentary trust is created after your death through your Last Will and Testament. Trusts can also be either revocable or irrevocable, depending on whether the Grantor retains the ability to modify or revoke the trust after its creation.
The Trustee’s duties can be extensive and often require a combination of legal, financial, and administrative skills. Common responsibilities include managing and investing trust assets, communicating with beneficiaries, maintaining accurate records, filing tax returns, and distributing assets according to the terms of the trust agreement. The Trustee must also handle disputes and ensure that every action taken complies with both the trust agreement and Arkansas law.
Advantages of Choosing Co-Trustees
Appointing more than one Trustee may seem appealing for several reasons, such as a desire to maintain family harmony. For example, if you have two adult children, you may wish to avoid showing favoritism by naming both as Co-Trustees. In other cases, a Grantor may pair a family member with a professional Trustee, such as a financial advisor, accountant, or attorney, believing that this combination offers the perfect balance of personal insight and professional experience.
Another perceived advantage of appointing Co-Trustees is the opportunity for shared decision-making. Some Grantors feel more comfortable knowing that two or more people will consult with each other before making important financial or administrative choices. This arrangement can create a sense of accountability and provide Trustees with a built-in “sounding board” when handling complicated issues.
Finally, because administering a trust typically involves substantial responsibility, having Co-Trustees can help divide the workload. When duties such as managing investments, preparing tax filings, or communicating with beneficiaries are shared, no single person bears the full burden of administration. In some circumstances, this arrangement can make the overall process smoother and less stressful.
Disadvantages of Choosing Co-Trustees
While naming Co-Trustees can appear to offer balance and fairness, the arrangement can also lead to unnecessary expense and may increase the likelihood of conflict. One of the most significant disadvantages is the potential for disagreement. When more than one person is required to make decisions jointly, administrative delays can occur, especially if the Co-Trustees do not see eye to eye. If your trust document requires all Co-Trustees to act unanimously, even minor disputes could stall important actions, such as making distributions or selling property. The situation becomes even more complicated when an even number of Co-Trustees is appointed. If they disagree and cannot resolve the issue, the trust could face deadlock, forcing the parties to seek court intervention to move forward. This not only delays administration but also increases costs.
In addition, appointing multiple Trustees almost always results in higher administration expenses. Trustees are generally entitled to reasonable compensation for their services, and if you name two or more individuals or entities, each may expect payment. This could reduce the amount of money ultimately available to beneficiaries.
Naming Co-Trustees can also create or increase tension within families. When siblings or other relatives are asked to share control, old rivalries or differing financial philosophies may surface. What begins as an effort to promote fairness can sometimes have the opposite effect, leading to resentment or even litigation among family members.
Pairing a family member with a professional Trustee can also introduce challenges. Although the intention may be to combine personal understanding with professional oversight, in practice, this dual arrangement often leads to confusion and frustration. The family member may feel that the professional is too rigid or controlling, while the professional may find the family member overly emotional or inexperienced in financial matters. In most cases, a better approach is to name a trusted family member as the sole Trustee and permit that individual to retain legal or financial professionals as needed for advice and support or to simply reply entirely on a professional Trustee to manage the trust.
Do You Have Additional Questions about Appointing Co-Trustees for Your Arkansas Trust?
For additional information, please sign up for one of our FREE estate planning seminars. If you have additional questions or concerns about appointing Co-Trustees for your Arkansas trust, contact the experienced Washington County, Fayetteville, Springdale, Rogers, Bentonville, and Northwest Arkansas trust attorneys at Wilcox Attorneys, PA by calling 479-443-0062 to schedule your appointment today.
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