This note is for folks who are getting ready to make a Last Will.
A key ingredient in a Will is to name a Trustee. This position used to be called an Executor, or in the feminine gender an Executrix. Either way, it is the person who is given responsibility to administer, or manage the Estate of the deceased. It is an important job.
There is quite a bit of flexibility allowed when it comes time to name a Trustee.
For openers, you can name more than one person to do the job. If you wanted you could name 5 people to be your Trustees. Of course, if there is more than one person, then the Will should set out some procedure for how actual decisions are made by these 5. In theory, each of the 5 could act independently, but that could get complicated quick. Alternatively, the Will might say that all 5 have to agree on a particular action before it can happen. Or the will could set up a majority vote system, where 3 out of the 5 have to agree before any action is taken concerning the administration of the Estate.
The most common situation with a Husband and Wife making their wills at the same time is to name the spouse as the primary Trustee. That means that on the death of the first person in the couple, the surviving spouse becomes the Trustee. Fairly straight forward and sensible.
The Will generally next provides for a person to be named as a back-up Trustee. This would come into play on the death of the last of the Husband / Wife couple. Or it would come into play if the surviving spouse did not want the job, or was alive, but mentally unable to do the job.
In these cases it is pretty standard for the will maker to name a child as the back-up Trustee. Naturally, a person has to be at least 18 years of age to take on the job as Trustee. A tough decision sometimes faces a couple who have more than 1 adult child. Let us imagine that there are 3 children of the marriage, all over 18, and all quite capable of taking on the job of trustee. A number of back-up trustee options present themselves.
A single back up Trustee could be named, that is picking one of the children to do the job. Sometimes though, parents do not want to single out one child – rather they want to treat all the children the same way. This might suggest naming all 3 children as back up Trustees. There are some parents who might not want to name all 3 kids as Trustees, but they believe that it is best to name at least 2 of the children. That way there would be some checks and balances in the administration of the estate, and a second set of eyes would be watching how the estate was managed.
In this context, I am often asked, what path is best? Should we name just one Trustee, or two or perhaps even three trustees to do the job? To be clear there is no simple answer. And indeed there are different schools of thought from knowledgeable advisers as to which option to take.
My personal preference though, is to name a single Trustee – rather than 2 or more. I say pick one individual, and forget about the notion of treating all children equally. I offer two reasons for wanting to choose a single individual. First is administrative convenience, and second is avoiding conflicts between Trustees.
By administrative convenience, keep in mind that the Trustees will be required to attend to a fair bit of paperwork. Usually these papers have to be signed by all the Trustees. It is simply inconvenient to have 2 or more individuals sign the required documents, when it might have been set up to have just one person sign. Appointments at a bank, or workplace, or a law office are more challenging to arrange and follow through on if multiple trustee agendas have to be consulted and accommodated.
As concerns avoidance of conflict, it must be acknowledged that if there are 2 or more trustees, then it is entirely possible and often likely, that there will be some difference of opinion among the trustees on how to handle a particular item. How will such a difference of opinion be handled? One thing is sure, that the person making the will should have a plan to resolve differences of opinions among trustees, and that this plan should be set out in the will.
Some approaches to resolving differences between trustees include identifying one of the trustees as having the final say. Another approach is to use a majority rules approach (when there are 3 or more trustees). Still another approach is to decide on a path where there is no unanimity by way of a coin toss (or as one couple chose, by resort to a paper rock scissors contest).
It may seem obvious from all this that having multiple trustees is more complicated than naming one individual to do the tasks. And because I prefer simple to complicated, I am a fan of a single person as Trustee, rather than multiple people. Of course, it is not the lawyer’s preferences that get set down in the Will, it is the will maker’s preferences that can and do carry the day.