Are you considering naming a child as your successor trustee? In this episode of Absolute Trust Talk, host Kirsten Howe and associate attorney Jessica Colbert explore the pros and cons of selecting a child for this crucial role. They break down key factors, including whether to name one child or multiple children as co-trustees, and the potential challenges that can arise, from sibling dynamics to administrative complexities. Tune in to gain valuable insights and ensure you make an informed decision about your trust’s future.
Time-stamped Show Notes:
0:00 Introduction
1:45 What’s better—naming one or multiple children as your successor trustee? We discuss the pros and cons, starting with the advantages of naming just one child.
3:40 There are potential downsides to naming a child as your successor trustee.
5:42 After discussing the issues with naming just one child as trustee, here’s what to consider when naming multiple children as co-trustees.
6:55 Can siblings truly collaborate effectively as co-trustees? Hear our thoughts in this segment.
Transcript:
Hello and welcome to Absolute Trust Talk. This is our video podcast here at Absolute Trust Counsel. I’m Kirsten Howe, and I’m joined by one of our associate attorneys, Jessica Colbert. Today, we are continuing our conversation about selecting a successor trustee. Last time, we focused on the qualities that you’re looking for when you’re selecting a successor trustee and this time, we’re going to talk about if you’re going to choose a child to be the trustee of your trust, what are the things to keep in mind when you’re trying to choose a child as a trustee?
This is probably the most common thing that our clients do. Obviously, clients that have children. Most of our clients with children will choose a child or children as their successor trustees. They’re natural, built-in people who have to do work for us when we get old, and there are thoughts about choosing just one child as opposed to choosing multiple children to work together as co-trustees. There’s really no right answer. There’s no wrong answer. Every family is different, but we want to educate our clients and ensure they understand all the pluses and minuses of choosing a child or multiple children.
We’ve already talked about the qualities that you’re looking for, so we’re going to assume that all of your children have all of these wonderful qualities, and that’s not the issue.
Jessica, what are some of the pluses and minuses of naming one child to be your successor trustee?
Yes, naming one child can be a plus simply because it can be more efficient. If it’s just one person, that person has to deal with outside parties and financial institutions, whereas if you name more than one, those outside parties will require dealing with all of the named trustees. Just having one can make it quicker and easier. With only one signature required, things move quickly.
As co-trustees, the co-trustees have to make all the decisions, large and small, together. They have to agree on everything, which sometimes happens, but we have to consider the possibility that your two co-trustees are two different people, and they may not agree on everything. You could get into a situation where the trustees get to an impasse. There’s something they have to decide, and they see it differently.
You may also have a child who just seems better suited for the job, whether they have certain legal or financial experience that makes them a better fit. It can also be that a child may have a much more demanding job and lifestyle already, so the one who maybe doesn’t have so much of a demanding job in life already could be better suited for the time that is required for the job.
To name them as co-trustees because they are siblings and you don’t want anybody to feel left out, think about all these things. If one child really isn’t suited to be a trustee, they’re going to drag the other one down a bit if you name them co-trustees.
I find it interesting that a lot of clients think, and they’ll say to us, “Well, our children get along very well.” To the clients, that leads to the next step, which may be logical or not, which is that they’ll always get along well. We have seen plenty of cases where that isn’t the case, where the kids seem to get along while the parents are alive, but things happen afterward.
The negative about even naming a child at all is that there can be resentments that the parents aren’t aware of, things that are maybe carried over from childhood. Maybe naming a child as a trustee or co-trustee isn’t a great idea.
Being a trustee can be a lot of work, and the child doing it is doing that hard work. The other children may need help understanding exactly all that’s entailed and may get impatient. There’s also the possibility that if you choose one child, the other children who are not chosen might take offense. They might feel resentful, and since you’re already gone, the person who will bear the brunt of that resentment will be the trustee you chose.
Another thing that could result in resentment is that a person serving as trustee is entitled to compensation for that service, and the other children may resent that one child is getting more money in their eyes. They’re getting paid for the work they have to do, plus they get an inheritance. Sometimes, children and siblings don’t see that as fair, which inherently is fair, but people don’t always see it that way.
Contrary to choosing just one child to be the trustee, we do not infrequently have clients wanting to choose multiple children, either two children as co-trustees, or sometimes even, “Let’s make all of our four children be co-trustees.” Jessica, what issues do you see with that?
When you have multiple trustees, all decisions regarding the trust administration have to be made together, and that could end up really tying up the administration because it can be very inefficient just in working together to make those decisions and also as a group, having to go out and execute every single step of the administration. That can lead to an impasse if they can’t agree. The way an impasse among co-trustees is resolved if they can’t work it out is somebody has to go to court, and now it becomes a real nightmare for the family because now everybody’s got lawyers, and the money is just getting eaten up. That’s a danger. It’s a realistic danger to have multiple co-trustees.
6:55 When it works, it can be great. We’ve had numerous families where the parents named three siblings as co-trustees, and they did it beautifully. Everybody did their job. Everybody was open and honest with each other. It can work. It’s just very hard to predict when it’s going to work and when it’s not going to work. Take that seriously. Think about that really hard before you name multiple siblings as co-trustees.
In our next episode, we will continue this conversation and discuss other alternatives to children as successor trustees. I hope you got a lot out of this one, and we look forward to connecting with you again.
Resources Related to This Episode:
- Absolute Trust Talk Episode 148: How to Choose the Right Successor Trustee for Your Trust: https://absolutetrustcounsel.com/148-how-to-choose-the-right-successor-trustee-for-your-trust/
- Absolute Trust Talk Episode 121: What Happens When a Trustee, Executor, or Beneficiary Dies? https://absolutetrustcounsel.com/121-what-happens-when-a-trustee-executor-or-beneficiary-dies/
- Absolute Trust Talk Episode 146: Trustee and Executor Responsibilities: Best Practices and Pitfalls Part 3 https://absolutetrustcounsel.com/146-trustee-and-executor-responsibilities-best-practices-and-pitfalls-part-3/
- Absolute Trust Talk Episode 145: Trustee and Executor Responsibilities: Best Practices and Pitfalls Part 2 https://absolutetrustcounsel.com/145-trustee-and-executor-responsibilities-best-practices-and-pitfalls-part-2/
- Absolute Trust Talk Episode 144: Navigating Trustee and Executor Responsibilities: Best Practices and Pitfalls https://absolutetrustcounsel.com/144-navigating-trustee-and-executor-responsibilities-best-practices-and-pitfalls/
- A Will is Not Enough – Securing Your Legacy with Estate Planning Life can change in an instant. A will is not enough to be prepared. Get free access to our actionable E-book Guidebook #1 and start protecting your legacy today. https://absolutetrustcounsel.com/guidebooks/
- Learn how to comfortably define gray areas and assess your own unique needs to effortlessly build a secure future now. Check out Guidebook #2, Estate Planning Beyond the Basics, here > https://absolutetrustcounsel.com/guidebooks/
- Get our free introductory guide to the most used estate planning tool, family trusts, and understand how we plan to help protect your family. Guidebook #3: https://absolutetrustcounsel.com/guidebooks/
- Absolute Trust Counsel would love to offer access to our Incapacity Planning resource page: https://AbsoluteTrustCounsel.com/Incapacity-Planning/. We’ve collected our top planning information all in one place so listeners can find videos, guidebooks, blog posts, and a host of information with tips and strategies on implementing, planning, and protecting themselves and their loved ones.
- We’re pleased to provide a library of e-books to address common estate planning questions and concerns in practical, easy-to-understand language. https://AbsoluteTrustCounsel.com/Resources/.
- ASK KIRSTEN: If you’d like Kirsten to answer your question on the air, please email her at Info@AbsoluteTrustCounsel.com.
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