What Happens When Co-Trustees Disagree? Our new series: The Short Answer
Grantors may appoint co-trustees of their trust for various reasons. Sometimes, they believe co-trustees can place checks on and supervise each other.
In other cases, grantors may name their children to serve as co-trustees because they wish to avoid the appearance of favoring one child.
However, if the co-trustees who are serving together disagree as to a certain issue, there may be a deadlock, and the co-trustees may be unable to take any action. Here are some possible options to help resolve such disputes: · In the trust document, the trustors can name a neutral third-party or one of the co-trustees as a “tie-breaker” whose vote will determine how the co-trustees should proceed. The tie-breaker should be someone fully trusted by the trustors. The trust can also allow an overruled co-trustee to record any dissent.
· Allow the trustees to submit the issue to the beneficiaries for determination by a majority vote. Each beneficiary should be provided all necessary information to make an informed decision, and their votes should be recorded.
· Submit the dispute to a mediator or arbiter to resolve the disagreement. Preferably, the trust allows mediation and arbitration as a mechanism to resolve disputes.
· File a pleading with the court and ask the court to provide instruction on how the disagreement should be handled.
Even reasonable persons can disagree, and if the trust provides for some or all of these options, it is possible the disagreement can be resolved more quickly and efficiently.
We hope this will help you help others.
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