Can a Trust Have Multiple Trustees?

A trust can have multiple trustees, who are referred to as co-trustees. These individuals or institutions share the responsibility of managing the trust’s assets and carrying out its terms. The role of any trustee is to administer the trust property for the benefit of the beneficiaries, a duty involving investment management, property maintenance, distributing assets, and filing tax returns.

The appointment of co-trustees introduces a layer of joint oversight to the trust’s administration. Each co-trustee holds the same fiduciary duty to act in the best interests of the beneficiaries. This shared authority is intended to provide checks and balances, combining different skills and perspectives to manage the trust effectively.

Defining Co-Trustee Roles in the Trust Document

The trust document is the foundational instrument that dictates how a co-trusteeship will function. The person who creates the trust, known as the grantor, has the authority to define the mechanics of the co-trustee relationship within this legal document. A well-drafted trust will anticipate potential areas of conflict and provide clear directives to prevent future disputes.

The grantor must decide whether co-trustees must act unanimously or if a majority vote will suffice. For example, a requirement for unanimity between two co-trustees means that any disagreement can bring the trust’s administration to a halt, whereas a majority rule with three co-trustees allows for decisions to be made even if one trustee dissents.

The trust document can also assign specific duties or powers to individual co-trustees. One trustee with financial expertise might be given primary authority over investment decisions, while another with real estate experience could manage the trust’s properties. The document may also place limitations, such as prohibiting a co-trustee who is also a beneficiary from making discretionary distributions to themselves to avoid conflicts of interest.

Co-Trustee Decision-Making Authority

A co-trustee’s decision-making authority is governed first by the trust document and then by applicable state law. If the trust is silent on how decisions are made, state law provides a default rule. The modern trend in a majority of states is that if there are only two co-trustees, they must agree unanimously. However, if there are three or more, they may act by majority vote. In other states, the default rule may require unanimity regardless of the number of trustees.

Even when a trust allows for majority rule, there is an expectation that all trustees will be consulted and participate in the discussion before a vote is taken. Financial institutions like banks and brokerage firms often have their own internal policies, sometimes requiring the signatures of all co-trustees on documents to transfer assets or open accounts.

In limited circumstances, a trust document might permit a single co-trustee to act alone on certain matters, such as paying bills or signing checks below a certain dollar amount, to improve efficiency. For major decisions affecting the trust’s principal, joint action remains the standard.

Managing Disagreements and Liability

When co-trustees cannot agree on a course of action, the resulting deadlock can paralyze the administration of the trust. To resolve these disputes, the trust document may outline a specific mechanism, such as requiring the parties to enter mediation. If the trust document is silent on dispute resolution or if mediation fails, co-trustees may need to seek court intervention.

A trustee can file a petition for instructions with the probate court, asking a judge to provide guidance on an issue or to approve a proposed action. This provides a legal safe harbor for the trustees, as acting under a court order protects them from later claims, but the process can be costly and time-consuming.

Co-trustees have a fiduciary duty to monitor each other. A trustee can be held personally liable for the wrongful acts or negligence of a fellow co-trustee. This liability arises if a trustee improperly delegates their duties, knowingly participates in or conceals a breach of trust, or fails to take reasonable steps to prevent a co-trustee from committing a breach. Being a passive trustee is not a defense; each has an affirmative obligation to be actively involved in the trust’s management.

This concept of joint and several liability means that if a breach occurs, a beneficiary could recover the full amount of the loss from any single trustee. For example, if one trustee makes a reckless investment and the other trustee was aware of it but did nothing to stop it, both could be held responsible.

Resignation and Removal of a Co-Trustee

A co-trustee who wishes to step down from their role must follow a formal process for resignation. The trust document often specifies the required steps, but if it does not, state law provides a default procedure. A trustee must provide written notice of their intent to resign to their co-trustees and all qualified beneficiaries of the trust, often with a 30-day notice period. In some cases, particularly if the resignation is contested or would leave the trust without a trustee, court approval may be necessary. A resigning trustee remains liable for any breaches of trust that occurred during their tenure.

The removal of a co-trustee is a more contentious process, typically initiated by a fellow co-trustee or a beneficiary filing a petition with the court. Common grounds for removal include a serious breach of trust, an ongoing lack of cooperation among co-trustees that impairs the trust’s administration, or a clear conflict of interest. The court will only remove a trustee if there is sufficient evidence of wrongdoing or unfitness. A simple disagreement between co-trustees is not usually enough to warrant removal, as courts give deference to the grantor’s original choice of trustee.