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Pitfalls of naming CO-Executors and Co-Trustees

It is with good intentions that people appoint more than one executor or co-trustee in their will or trust. Of course the executor in the case of a will, or the trustee in the case of a trust, both executors have a lot of responsibility. Presumably, this is why often people appoint two persons to attempt to lighten the load as both people will have the authority to act for the deceased.  Maybe even people envision that If each executor has a different skill set, they can each take on the duties they are best suited for, ensuring that all tasks are completed properly.

Most likely the reason a person appoints co-executors or co-trustees is to ensure that the estate is distributed in a fair and honest manner. In theory, two sets of eyes are better than one when it comes to keeping matters above board.  It offers an individual peace of mind before death to have the promise of either a trust administration or probate process that conforms to one’s wishes.

Nonetheless, in practice appointing co-executors and co-trustees often has the exact opposite effect. There are frequently negative consequences of appointing two executors in a will and co-trustees as successor trustees for a trust. The Estate Administration Act and the Probate Code stipulate that personal representatives must act unanimously. Any serious disagreements that cannot be resolved between two executors must be settled in court.

While one may think your two adult children will simply agree on everything, in reality, that may not be the case. Two people who have different values and ideas may see things differently, especially when one is no longer alive to provide a balance of power. 

In addition, when there are two executors or co-trustees (or more), each one is legally responsible for the other’s actions. If the other person takes funds out of the estate and is not legally allowed to do so, the co-executor or co-trustee is on the hook. While the co-executor or co-trustee does have the option to sue the person who took the funds, there is no guarantee that the funds will be recovered.

Another potential downside is a situation where one of the executors or trustees refuses to help. It’s not unusual for people who have been appointed as an executor in a will or a trustee in a trust not to want to take on the job. There are various reasons for this, including ill health, too little time, and relationship issues within the family. In our experience, we have also seen one co trustee or co executor possess the decedent’s property to the exclusion of the beneficiaries and the co trustee is stuck in a court action.

Finally, from a practical situation, banks and financial institutions regularly don’t honor or allow two signer accounts.  Those institutions that do allow it generally will only allow it if the testamentary instruments allow either to act alone and both executors or co-trustees must indemnify the institution for any acts carried out without the consent of a co-trustee which can make the question o f “can a co-trustee act alone” tricky in many cases.  This defeats the point of “co” in most people’s minds.

Lastly, in some counties (especially San Bernardino County), judges may ask co-executors to provide a bond, which is very expensive.

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