Listen to “Should You Have Joint Trustees? (Episode #218)” on Spreaker.
Are you considering appointing multiple children to be in charge of settling your estate? If so, then today’s episode is for you. Tom discusses the pros and cons of having multiple children serve as your trustees or agents under powers of attorney. And, he explains the difference between appointing them as joint-trustees or co-trustees.
Audio Transcript:
Should you have joint trustees? When you’re putting together your trust, if that’s what you’re going to have as part of your estate plan, you’re looking at naming successor trustees. Who it that’s going to settle your trust after your death? Of course, we’re also talking about, who’s going to be the personal representative under your wills? Who’s going to be agents under your financial power of attorney? Who’s going to be agents under your healthcare power of attorney? Who’s going to be appointment to make funeral arrangements for you? So we’re looking at naming these different individuals, and, oftentimes, clients who have children are going to ask, whether it is better to appoint one child or perhaps multiple children as a joint trustees or as joint agents or personal representatives, et cetera.
So where do we start? Well, we’re going to start with the first question. If you’re considering appointing multiple children, the first question is how well do your children that you’re looking at appointing get along? If, for example, there’s already discord in the family, then having multiple children serving can get ugly very quickly because now you’re taking children who don’t already get along and you’re forcing them to work together.
From experience, that does not improve the chances that they will get along. In fact, just the opposite. They will fight even more than they are already did when you were alive when you’re calling upon them to work together, to settle that estate after your death. And, obviously, if that leads to fights between the children, it can increase, certainly the legal expenses that are going to be incurred in settling your estate.
So if, your goal is, as most clients, to maintain family harmony after your death, in that case, then appointing multiple children who already don’t get along is not going to accomplish that goal.
On the other hand, If your goal is to maximize family disharmony, then appointing multiple children who do not get along will accomplish that. We did have one client where that was part of his estate planning goal. He wanted his children to fight tooth and nail after his death because he thought they didn’t treat him well enough during his lifetime. That was his way of giving them their comeuppance after his death.
Now something else to think about. You might be considering appointing multiple children as your agents, under powers of attorney. It could be your financial power of attorney or your healthcare power of attorney. If you think about that, now you’re appointing children who will be called upon to act on your behalf while you’re still alive. You’re still alive, but you’re incapacitated. Someone needs to make medical decisions for you. Someone needs to manage your finances. It can certainly really be bad for you if the children don’t all get along.
If you’re confident they will continue to get along after your death, then having children, perhaps as joint trustees or as joint personal representatives or joint agents might be appropriate for you.
The next question though, you will have to decide, is do you want them to serve as joint, co, because you’ll have those options? What’s the difference? If you have two or more children serving as for example, co-trustees then any one of them can take any action that needs to be taken by a trustee without the involvement or agreement of the others. That’s the concept of co, they’re all equal. They all can do whatever needs to be done independently of the others. Joint, on the other hand, means that any action that needs to be taken has to be taken by all of them together.
Let me give you an example. Let’s say you have real estate and the real estate has to be sold after your death. If you have children as co-trustees in charge of your trust, then any one of the co-trustees can execute documents necessary to complete the sale. On the other hand, if you have them as joint trustees, then they all would have to sign the documents, including all the documents that are required at the closing.
Your decision between co-trustees and joint trustees could be impacted by where your children are living. If there’s a considerable distance between them, then co-trustees might be more appropriate because it might be more difficult for joint trustees to have to travel and get together to take action in settling your estate.
Of course, though, if you want them to all oversee what each other is and make sure everyone is doing the right thing, then you might want to consider appointing them as joint trustees.
So you have to make some decisions. If you’re going to have more than one, are they going to serve as joint, or are they going to serve as co.
The same considerations are going to apply if you’re going to have multiple children serve as personal representatives, as agents under your durable power of attorney, as agents under your power of attorney for your healthcare, etc. You can have them joint, or you can have them co.
Now, when don’t we recommend joint agents? We don’t recommend joint agents under your power of attorney for health care. Why? Let’s think that one through. Here’s the problem. You need medical treatment. You need medical decisions made for you in your not able to make the decisions for yourself. So your doctor is going to look at your power of attorney for healthcare and decide who does he or she needs to talk to. Well, if you have named multiple children as joint agents, then your doctor is going to need to talk to all of the joint agents and get their agreement before rendering treatment. Why? Because they’re all joint. That’s what you’ve said to the doctor. I want you to work with all of my children. They all need to agree on what my treatment is.
Well, you don’t really want to find yourself in the emergency room where quick decisions need to be made for your treatment, but they’re not able to make them because the doctor’s unable to contact all of the agents wherever they happen to be. Or they’re not able to get all of the agents to agree as to a course of treatment.
That is why we don’t recommend joint agents under a health care power of attorney. If you’re going to have multiple children under your health care power of attorney, it is much better then to have them as co agents so that they all have equal decision-making authority. So the doctor can talk to whoever is available.
Remember, whatever you decide about multiple children, whether they’re going to be joint or whether they’re going to be co, you need to make sure that your documents are clear as to whether or not multiple fiduciaries are joint and have to work together, or are co with the ability of any one of them to work without others. Why? Here’s what we find frequently. Banks will treat multiple fiduciaries or multiple agents as joint, unless the documents clearly indicate that they have authority to act independently.
So let’s say you just had that power of attorney prepared and it says I appoint Bob and Sue and Johnny as my agents. Well, most banks are going to interpret that as appointing them as joint, meaning they all have to participate in any action with the bank. So if you want them to be co where any one of them can do that, that needs to be clear in the document so that the bank will recognize in that case that they can work with any one of the children.
