Have you been named a co-trustee and now responsible for managing the property of a loved one? When this happens, you might wonder what your responsibilities are and how you’ll work with the others who share the co-trustee duties. You might even be concerned that one trustee seems to be doing everything while the other trustee seems to be doing nothing. If these are some of your concerns, let’s talk about a co-trustee’s duties.
Here at the Grossman Law firm, we have been working with co-trustees to settle trust disputes by helping people navigate complex trust and probate issues for over 20 years. We’ve seen how co-trustees can successfully divide the work and we have helped clients when one trustee fails to do so.
After this article, you will better understand:
- The duties and regulations that a Co-Trustee must follow
- How co-trustee duties should be divided
- What to do when a co-trustee doesn’t fulfill their responsibilities
What are a Co-Trustees’ Duties?
California’s Trust Law imposes on co-trustees the same duties as a sole trustee.
- Management of trust assets
- Filing all necessary tax returns
- Distribution of assets to the beneficiaries
In addition, the law instructs co-trustees to participate in the administration of the trust. It also requires one co-trustee to take reasonable steps to prevent the other co-trustee from committing a breach of trust.
This means that if there is a breach of trust, then the “innocent” co-trustee must take reasonable steps to get the other co-trustee to “redress a breach of trust.”
In other words, when a trustee fails to meet one of their legal duties, the innocent co-trustee cannot just sit idly by knowing their co-trustee has ignored their trust obligations.
Participation in co-trustees duties
Co-trustees must participate in the administration of the trust together. A co-trustee cannot simply delegate or ask their fellow co-trustee to do the entire administration of the trust.
A co-trustee must play an active role in the administration of the trust. If there is a breach of trust. It is not enough for a co-trustee to state they were not involved in committing the breach.
That means just because a co-trustee says they are unaware of the crime, they are still liable. The co-trustees must work together and create a system of checks and balances, to properly manage the trust. Unless otherwise stated in the trust instrument.
Of course, in theory, it is unlikely that co-trustees will do an equal amount of work. And will mostly perform every task together. Nor is that required. So, you may be asking, what is a co-trustee’s required duty?
A co-trustee must keep the other co-trustee informed about what is occurring with the trust. So, a less active trustee understands what is happening and consents to it.
The trustees are also responsible for maintaining accurate records of the trust assets and providing regular accounting updates to the trust’s beneficiaries.
What does it mean to prevent a co-trustee from committing a breach of trust?
A co-trustee must take reasonable steps to prevent a co-trustee from committing a breach of trust. Now what that will require depends on the property the trust owns.
Most trusts will have some amount of cash on hand. Either the co-trustees should both be required to sign checks. Or at a minimum, both co-trustees should be receiving monthly statements so they can both see what one another has done with trust funds.
When the real estate is sold, both co-trustees should ensure the sales proceeds go into a trust-owned account. If one trustee didn’t pay attention while the other co-trustee puts the money in their personal- account, then the first trustee quite likely did not take reasonable steps to prevent a breach of trust.
What is redressing a breach of trust?
If a co-trustee discovers their other co-trustee has breached their fiduciary duty. They have to take reasonable steps to get their co-trustee to “redress a breach of trust.” This means the trustee is required to refund the trust. Also commonly known as “paying a surcharge.”
Redressing a trust could be something as simple as discovering some money was co-mingling and persuading the other trustee to return the co-mingled funds to the trust account. Or, it could be as significant as one co-trustee having to sue the other co-trustee to get back wrongfully taken trust property.
Will the Situation fix itself?
If you have co-trustees managing your trust, then be sure to examine whether they are both participating in the administration of the trust.
If something goes wrong during trust administration and you discover a trustee is trying to absolve themselves by claiming they didn’t know. That’s not a valid excuse.
That breach of the trustee’s fiduciary duty may reduce your inheritance. The situation will not fix itself; you must take immediate action to get the full amount of your inheritance.
Need More Guidance on Co-Trustees’ Duties?
If you want a more thorough overview of the California Trust Litigation Process, check out our Extensive Blog Posts to understand the trust administration process and your rights as a trust beneficiary. Most importantly, our resources will help you know when you need to get help!
If you have questions about your specific situation, please contact us to discuss a free phone consultation. You are welcome to call our office or fill out our GET HELP NOW form.