Who Do You Trust? Selecting
an Executor or Trustee - A Primer
by James V. Quillinan, Attorney at Law
The Letitia Building
70 South First Street
San Jose, California 95113-2406
Potential disadvantages.
Before appointing multiple fiduciaries, you must consider the problems that may result. For example, there is the potential of deadlock and paralysis upon a tie vote if an even number of fiduciaries are serving. A costly judicial resolution of this standstill would then be needed. This problem can be avoided if the you either
- appoint an odd number of fiduciaries or
- provide a method of resolving tie votes.
The requirement of obtaining a majority vote may cause an additional
problem. If a decision regarding management or investment
needs to be made quickly, such as is often the case with
securities and foreign investments, it may be difficult
to obtain the consent of a majority of the fiduciaries in
time to take the appropriate action.
If you appoint multiple fiduciaries, you need to be aware of the likelihood of additional expenses. For example, if professional fiduciaries are employed, there will be multiple fiduciary fees. In most cases there will be additional administrative fees as well because of the extra conferences, telephone calls and paperwork that are required. Some corporate fiduciaries may charge higher fee if a co-fiduciary is an individual because of the additional time that it usually takes to deal with an individual.
An individual or corporation may be reluctant to serve with other fiduciaries for fear of personal liability for the acts of the other fiduciaries, Normally, each co-trustee is jointly and severally liable for the acts of all trustees.
Other Fiduciaries
Instead of appointing multiple fiduciaries, you could name a "special" fiduciary or advisory committee to have responsibility for only a limited portion of estate or trust business. "The special trustee is most often used to run a closely held business, for example, in cases where you would prefer to have your partner run the business, be in full control, and operate it in the same way that it has been operated during your lifetime." Of course, you must adjust other portions of the estate or trust to reflect the use of a special fiduciary, e.g., the normal fiduciary's fee may be reduced because management of certain assets is being handled by the special fiduciary.
You should always name alternate fiduciaries in case the first choice is unable or unwilling to serve. You may also specify a method for selecting a successor fiduciary. If there are no alternates and no selection method, court action will be necessary to fill the vacancy.
If you appoint multiple fiduciaries, you need to be aware of the likelihood of additional expenses. For example, if professional fiduciaries are employed, there will be multiple fiduciary fees. In most cases there will be additional administrative fees as well because of the extra conferences, telephone calls and paperwork that are required. Some corporate fiduciaries may charge higher fee if a co-fiduciary is an individual because of the additional time that it usually takes to deal with an individual.
An individual or corporation may be reluctant to serve with other fiduciaries for fear of personal liability for the acts of the other fiduciaries, Normally, each co-trustee is jointly and severally liable for the acts of all trustees.
Other Fiduciaries
Instead of appointing multiple fiduciaries, you could name a "special" fiduciary or advisory committee to have responsibility for only a limited portion of estate or trust business. "The special trustee is most often used to run a closely held business, for example, in cases where you would prefer to have your partner run the business, be in full control, and operate it in the same way that it has been operated during your lifetime." Of course, you must adjust other portions of the estate or trust to reflect the use of a special fiduciary, e.g., the normal fiduciary's fee may be reduced because management of certain assets is being handled by the special fiduciary.
You should always name alternate fiduciaries in case the first choice is unable or unwilling to serve. You may also specify a method for selecting a successor fiduciary. If there are no alternates and no selection method, court action will be necessary to fill the vacancy.
