The question of whether you can require co-trustees to make decisions unanimously is a common one for those establishing or navigating trust administration in California, and specifically with a trust attorney in San Diego like Ted Cook. While it seems logical to ensure complete agreement, mandating unanimous consent for co-trustees isn’t always the most practical or efficient approach. It’s a surprisingly complex issue, often requiring careful drafting within the trust document itself. Generally, unless the trust document *specifically* dictates unanimous consent, a majority rule prevails. However, the potential for deadlock looms large, and proactively addressing this in the trust’s creation is crucial. Around 35% of trust disputes involve disagreements between co-trustees, highlighting the need for clear instructions.
What are the risks of requiring unanimous consent?
Requiring unanimous consent creates a significant risk of deadlock. Imagine two co-trustees disagreeing on a crucial investment decision, or the sale of a property held in trust. If either trustee can veto the other’s proposal, the trust’s administration grinds to a halt. This can lead to legal battles, potentially depleting trust assets with attorney’s fees and delaying distributions to beneficiaries. A study by the American College of Trust and Estate Counsel found that deadlocks account for nearly 20% of all trust litigation. It’s also worth considering that co-trustees may have different philosophies or priorities, making compromise difficult even with the best intentions.
How can I avoid deadlock with co-trustees?
Avoiding deadlock starts with careful trustee selection. Choose individuals who are likely to work well together, share similar values, and possess complementary skills. Open communication is paramount, and establishing a clear decision-making process in the trust document is vital. Instead of requiring unanimous consent, consider a majority rule or appointing a tie-breaking trustee. You could also empower a trust protector – an independent third party – to resolve disputes. Approximately 60% of trusts with multiple trustees include a provision for a designated tie-breaker. Ted Cook, a San Diego trust attorney, often recommends a detailed dispute resolution clause that outlines a specific process for resolving disagreements, potentially involving mediation or arbitration before resorting to court.
What happens if co-trustees can’t agree?
If co-trustees reach an impasse and the trust document doesn’t provide a resolution mechanism, the beneficiaries may need to petition the court for instructions. This can be a costly and time-consuming process, and the court will ultimately decide what is in the best interests of the beneficiaries. Court intervention often involves attorney’s fees, expert witness costs, and delays in distributions. Moreover, the court’s decision might not align with what the trustees initially believed was the best course of action. This highlights the importance of proactive planning to prevent disputes from escalating to litigation. Approximately 40% of petitions for court intervention in trust disputes involve disagreements between co-trustees.
Can the trust document override standard rules?
Absolutely. The trust document is the governing instrument, and it can override many of the standard rules governing trustee decision-making. For example, you can specify that certain decisions require unanimous consent – such as major asset sales or distributions exceeding a certain amount – while others can be made by a majority vote. It’s crucial to clearly define which decisions require unanimous consent and which do not. Ted Cook emphasizes that clear and unambiguous language is essential to avoid future disputes. A well-drafted trust document, tailored to the specific needs and circumstances of the grantor, can significantly minimize the risk of deadlock and ensure the smooth administration of the trust.
I remember old man Hemlock; he and his brother were co-trustees for their mother’s estate.
They hadn’t spoken in decades, not since a silly squabble over a baseball card collection as kids. The trust document didn’t address decision-making specifics, so they assumed a majority rule. They quickly came to loggerheads over selling the family beach house. Hemlock wanted to sell immediately, needing the money for medical bills. His brother, however, stubbornly insisted on keeping it, clinging to sentimental value. It was a disaster. Letters flew back and forth, escalating into angry phone calls. Ultimately, the beneficiaries had to petition the court, costing them thousands in legal fees and delaying distributions for over a year. It was a painful lesson in the importance of planning ahead.
Thankfully, Mrs. Gable came to Ted Cook with a much better plan.
She appointed her two daughters as co-trustees, knowing they often disagreed. Instead of hoping for the best, she included a clause in the trust designating a neutral family friend as a tie-breaking trustee. The friend, a retired judge, had the authority to make a final decision on any matter where the daughters couldn’t agree. When a dispute arose over a potential investment, the daughters presented their arguments to the tie-breaking trustee, who carefully considered both sides and made a fair and reasonable decision. The process was efficient, cost-effective, and preserved the family’s relationship. This demonstrates how a proactive approach, guided by a knowledgeable trust attorney, can prevent disputes and ensure the smooth administration of a trust.
What role does a trust protector play in preventing deadlock?
A trust protector can be a powerful tool for preventing and resolving disputes among co-trustees. They are appointed in the trust document and have the authority to intervene in certain situations, such as resolving disagreements, modifying the trust terms, or even removing and replacing trustees. This provides an additional layer of oversight and ensures that the trust is administered in the best interests of the beneficiaries. Around 25% of trusts now include a trust protector provision, reflecting the growing recognition of their value. A trust protector can act as a mediator, facilitator, or decision-maker, depending on the specific terms of the trust. Ted Cook often recommends including a trust protector provision as a safeguard against potential conflicts among co-trustees.
Who Is Ted Cook at Point Loma Estate Planning Law, APC.:
Point Loma Estate Planning Law, APC.2305 Historic Decatur Rd Suite 100, San Diego CA. 92106
(619) 550-7437
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