When individuals consider a will, trust, or power of attorney, they must decide whom they trust to carry out their wishes. For some, it is “more than one person.” There are pros and cons to naming co-fiduciaries like co-trustees, co-personal representatives, or co-agents under a power of attorney:
The Advantages
Built-in checks and balances. Co-fiduciaries can hold each other accountable. This can discourage mistakes, mismanagement, or temptation.
Shared workload and complementary skills. Administering an estate or trust involves paperwork, deadlines, investments, and difficult decisions. One co-fiduciary may be better with bookkeeping while the other co-fiduciary may more skillfully manage property or family communication.
Family harmony. Naming co-fiduciaries can prevent hurt feelings. A joint appointment can signal equal trust.
Continuity. If one co-fiduciary becomes ill, moves away, or dies, the other can often continue without a court proceeding to appoint a replacement.
Pairing with a professional. A family member or friend who knows your wishes can serve alongside a professional trustee who brings expertise and neutrality, provided a professional trustee agrees to such an arrangement.
The Disadvantages
Slower decisions. Depending on how the document is written, co-fiduciaries may be required to act together or by majority. Disagreements, travel, or unresponsiveness can delay everything from paying bills to selling real property.
Conflict. Siblings who have always struggled to agree rarely become better collaborators following a parent’s death. A stalemate between co-fiduciaries can lead to litigation, which drains assets and damages relationships.
Higher costs. Each fiduciary may be entitled to reasonable compensation. Disputes can multiply legal fees.
Unclear accountability. When two people share responsibilities, each may erroneously assume the other is overseeing a task. Generally, co-fiduciaries each have a duty to participate and may be liable for a co-fiduciary’s misconduct they knew about and failed to address.
Practical hurdles. Banks and other institutions may require signatures from both fiduciaries, creating logistical headaches when speed may matter.
Making It Work
If you decide on co-fiduciaries, it is essential to have carefully drafted documents which include these considerations:
- Whether the co-fiduciaries must act unanimously, by majority, or may act independently on routine matters;
- How deadlocks will be resolved, such as through mediation or a tie-breaking third party;
- Whether one co-fiduciary may delegate day-to-day tasks to the other;
- A clear process for removing or replacing a co-fiduciary; and
- Compensation and record-keeping expectations.
Some clients choose to have one primary fiduciary with a named successor, adviser, or a “trust protector” who can review decisions without being involved in every decision.
The Bottom Line
Co-fiduciaries can offer oversight, balance, and peace of mind, but only when the selected individuals can work together and the documents are carefully drafted. The best decisions consider your heirs, assets, and goals.
For more information, or to make an appointment, please contact Margo Passeau at margo@bethmcdaniel.com or 425-296-3121.
This article is for general information only and is not legal advice. Consult an attorney about your specific situation.
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