Many clients often ask me if it's a good idea to name two or more of their children or others such as their siblings to act as co-fiduciaries. This is really dependent upon each client's particular situation - in other words, sometimes it's a really good idea, and sometimes it's a really bad idea. You should work closely with your estate planning attorney to determine what will work in your particular situation. Below is a list of the pros and cons that you should consider if you're trying to decide whether or not to appoint co-fiduciaries.
PROS:
- Checks and balances - Two or more people acting together as co-fiduciaries will lead to built in checks and balances. There can be no secrets when more than one person has direct access to the trust or estate checking account, bank statements and investments. In many situations this creates a sense of security for the client, the fiduciaries and the beneficiaries.
- Complementary skills - If one fiduciary has experience managing real estate and the other with managing money, then the two together will get more accomplished. This will allow for more efficient administration and lower overall costs.
- Availability - One problem with naming a sole fiduciary arises when that fiduciary goes on vacation or an extended business trip. If an emergency situation arises and the fiduciary can't be reached, then valuable time and money could be wasted. With two or more fiduciaries, chances are one will be available at all times.
CONS:
- Deadlock - This is by far the most common problem with having two fiduciaries serve together. If they can't agree, they'll end up in court, and I've seen this type of deadlock go on for years and years. The bottom line is that if your children didn't get along while you were alive, then there's no reason to believe that they'll get along after you die.
- Time consuming - Sending documents that need to be signed to two or more fiduciaries who live in different states and waiting for the documents to come back is very time consuming for your attorney. Then, inevitably, one will sign something in the wrong place and so the document will have to resent. Even with modern technology and overnight mail, every day I see the time and money that's wasted by having to communicate with more than one fiduciary.
- Expensive - Two or more people serving as co-fiduciaries wil lead to two or more times the fees that they can collect. This can be avoided by providing in your estate planning documents that only a specific amount can be charged or the fee must be divided equally. In many states, however, fiduciaries have the right to go to court and request additional fees for "extraordinary services," and if they can prove that they've provided such services, then a judge will award the extra fees.
