Protecting Your Spouse with Co-Trustees: A Balanced Approach
Ensuring your spouse and your children’s inheritance is protected from undue influence or unscrupulous characters after your death is crucial. While the oversight of a trust protector can be daunting, appointing a co-trustee offers a balanced alternative with less burden and fewer restrictions. A well-chosen co-trustee provides just enough oversight and flexibility. Below are a few items for consideration when determining if one should appoint a co-trustee.
Why Appoint Co-Trustees?
Appointing one or more individuals as co-trustees can serve various purposes:
Joint Trusts: Spouses often serve as co-trustees of their joint or individual trusts.
Successor Co-Trustees: Trustors commonly appoint all their children to serve together as successor co-trustees, reducing the risk of misconduct and preferential treatment among beneficiaries.
Skill Diversity: Co-trustees bring a broader range of skills and lessen administrative burdens.
Naming Co-Trustees
Spouses may name a co-trustee to act under specific circumstances or upon triggering events. Some examples include:
"John Smith and Sally Smith, to serve jointly, or the survivor of them."
"John Smith and Sally Smith, jointly; if either fails or ceases to serve, they shall be replaced by the following successor trustee."
"John Smith to serve alongside Sally Smith only to administer the sale, refinance, or manage the real property held in trust."
Considerations for Appointing Co-Trustees
Careful consideration is essential when appointing co-trustees:
Conflict and Delay: Obtaining consent from multiple trustees can delay trust administration and may lead to conflicts requiring court involvement.
Accountability: Delegation of authority among co-trustees may result in lower accountability.
Addressing Co-Trustee Actions
When two or more trustees serve, the trust instrument should address:
Decision-Making: How trustees take action and the extent to which co-trustee may delegate to another or be held liable for another's actions.
Majority Decision: Washington law allows co-trustees who cannot reach a unanimous decision to act by majority decision. A dissenting co-trustee may be protected from liability in certain circumstances, except in cases of serious breach of trust.
Special Provisions
Some trustors may require at least two trustees to serve after their death in specific circumstances but not others. For example:
Single Trustee Authority: Authorizing a single trustee to sign checks or other documents on behalf of the trust with the same force and effect as if all trustees had signed. This provision can be convenient but also poses a risk of unauthorized action.
Two Trustees Required: The sale of real property is a common provision that requires two trustees. This is because of the value in real property and selling requires added skill, work, negotiation, and oversight.
Depending on your situation, adding a co-trustee can provide many benefits and added protection to the management of your trust for your loved ones. It is important to consult with an estate attorney to understand and determine if adding a co-trustee is the right avenue for your trust.
Reach out or contact Holmquist + Gardiner, PLLC to discuss your options and ensure your trust is properly managed for the future.
Kelley has extensive experience in estate planning, including charitable gift planning, tax-exempt entity establishment, and navigating complex tax laws. She brings a wealth of knowledge to the table. From drafting wills and trusts to offering counsel on lifetime and post-mortem tax planning strategies, she is equipped to address all aspects of your estate planning needs.
