Potential Problems with Siblings as Trustees
March 20, 2018
When parents create trusts, they often consider appointing one or more of their children as trustees. On the surface, it may seem like the best way to protect their legacy is to keep trust management within the family. However, this plan may backfire due to practicality or family dynamics.
Appointing two or more siblings as co-trustees could create logistical problems. Co-trustees may need to co-sign documents, or make other joint actions or decisions, which could be difficult if the siblings reside more than a few hours apart. Also, if the trustees have never administered a trust and attempt to do so without guidance, they may end up unknowingly violating legal requirements for trust administration or the terms of the trust itself.
Even if siblings have a fairly good relationship prior to one or more taking on the position of trustee, the process of administering a trust may cause contention. If only one or a few siblings are chosen as trustees, those not chosen could feel slighted. If distributions are discretionary, a trustee could be lenient with certain siblings, and mores strict with others, leading to accusations of favoritism.
Placing a sibling in charge of a special needs trust could create an even higher level of conflict between trustee and beneficiary. The trustee could be placed in an almost parental role, possibly taking the place of parents who cared for the disabled person during his entire life. A beneficiary may grow resentful if the sibling acting as trustee becomes too strict or controlling.
One way to prevent issues between sibling trustees and beneficiaries is to appoint a trained professional trustee. Professional trustees are well-versed in the legal requirements for trust administration. They are also better suited to make objective decisions when managing the trust since they have no emotional connection to the beneficiaries.
Choosing a trustee is an important decision that could affect not only current beneficiaries, but generations to come. It is wise to consult with an experienced trusts and estates attorney before a final choice is made.