Just in time for Halloween, the creation of the two-headed Trustee. They say two heads are better than one. So why not have two Trustees manage your Trust estate, or better yet a two-headed Trustee.
There can be strength in numbers. And many Trusts are administered with skill and grace with two Trustees at the helm. But not every partnership is successful. When a two-headed Trustee decides to argue with itself, disaster abounds.
Sometimes two people appointed to act over a Trust estate simply do not see eye-to-eye. They may disagree on investments, or distributions, or other management of Trust assets. They each have duties and obligations to the Trust, but every Trustee can interpret how to act out those duties and obligations differently and still be within the range of reasonableness.
Worse yet, under the default rules of California Trust law, co-trustees must act unanimously if they are to act at all. This means that one Trustee cannot simply break a deadlock by acting on his own. One of the Co-Trustees does not have the power and authority to act alone. Of course, the Trust document can change this requirement and allow one or both of the Co-Trustees to act alone, but Trust provisions rarely provide for that.
If Co-Trustees cannot agree on how to act or how to administer the Trust, then the horror of the two-headed Trustee comes to life because nothing gets done. Further, the Trust administration can turn into an ugly scene of chaos and destruction taking far more time, money, and emotional toll than is typically required to administer a Trust.
Ultimately, Co-Trustees can either resign or be removed by the Court, but that takes Court action—costing time and a good deal of money. Plus, you never know how the Court will rule when asking it to intervene in Trust affairs—it may not go your way.
The solution, therefore, lies in choosing the right heads to put together as a two-headed Trustee in the first place. Naming two people to act just because you think two heads are better than one may back fire if the two heads you name can’t work well together. Do you want your Co-Trustees to be a successful working partnership or do you want to see the horrors of a bad Trust administration? The choice is yours, put some thought into the decision and then choose wisely.