Having multiple trustees named in a trust document can offer several advantages. However, it also comes with its own set of challenges. Here, I will explore the pros and cons of having more than one trustee acting simultaneously.
- Diverse Expertise: Having more than one trustee can bring a variety of skills and expertise to the management of the trust. This can be especially beneficial if the trust involves complex financial or legal matters, as each fiduciary may have a unique perspective and knowledge base.
- Checks and Balances: Having more than one trustee provides a system of checks and balances. This helps prevent the abuse of power or decision-making by a single individual, reducing the risk of fraud or unethical behavior.
- Continuity: In the event that one trustee becomes incapacitated, resigns, or passes away, having multiple trustees ensures continuity in trust management. This is particularly important for long-term trusts that span several generations.
- Reduced Burden: Mandated duties can be demanding and time-consuming. Distributing responsibilities among multiple trustees can lighten the workload for each individual, making it more manageable and reducing the risk of burnout.
- Consensus Decision-Making: Having more than one trustee encourages a collaborative approach to decision-making. This can lead to more thoughtful and well-rounded choices as trustees must come to a consensus, taking into account various perspectives.
- Communication Challenges: Coordinating decisions among multiple trustees can be challenging. Differences in opinions, communication styles, or conflicting schedules may lead to delays in decision-making, potentially impacting the efficiency of the trust management. Take into consideration the challenges of adding an Attorney in Fact, and communication challenges can really get out of hand.
- Conflict of Interest: With more than one person or corporation making decisions, there is a higher likelihood of conflicts of interest arising. Each party may have their own personal or financial interests, leading to disagreements over trust management decisions.
- Complex Administration: The administration of a trust can become more complex with multiple trustees, especially if they are located in different geographic areas. Coordinating meetings, managing paperwork, and ensuring compliance may become more intricate.
- Costs: Having more than one trustee may lead to higher administrative costs. Each fiduciar may be entitled to compensation for their services, increasing the overall expenses associated with trust management.
- Decision Deadlocks: Disagreements among trustees can lead to decision deadlocks, where the inability to reach a consensus hinders the progress of important trust matters. This can create frustration and may require legal intervention to resolve.
While having more than one trustee can offer benefits such as diverse expertise and checks and balances, it also introduces challenges like communication issues and conflicts of interest. Careful consideration of the specific circumstances and goals of the trust is essential when deciding whether to appoint multiple trustees.
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Estate Attorney Jasper Berg