How cotrustees make decisions and handle disagreements

Start with the trust terms and their limits

In Minnesota, for example, trust terms generally govern trustee duties and powers, relationships among trustees and beneficiary rights, subject to mandatory statutory rules. Other states differ.

Good faith and acting in accordance with the trust's terms and purposes and beneficiary interests remain mandatory. Upon accepting the role, the trustee must administer under the trust and applicable law.

Participation and unavailable cotrustees

In Minnesota, for example, participation is required unless a cotrustee is temporarily unavailable because of absence, illness, disqualification under other law or other temporary incapacity, or has properly delegated the function. These defaults remain subject to trust terms and mandatory rules. Other states differ.

If a cotrustee is unavailable for one of those reasons, the remaining cotrustee or a majority of the remaining cotrustees may act when prompt action is necessary to achieve trust purposes or avoid injury to trust property.

Remaining cotrustees may also act after a vacancy. A trustee may delegate duties or powers to a cotrustee as prudent under the circumstances, and may revoke the delegation unless it was irrevocable.

Delaware voting and written dissent

In Delaware, unless the governing instrument provides otherwise, powers vested in two fiduciaries require both to act, while powers vested in three or more require a majority. Other states differ.

A dissenting fiduciary avoids liability for the majority's action when the dissent is evidenced by a writing delivered to the majority.

Unless expressly displaced by the governing instrument or other Delaware law, this protection does not excuse failures to participate, attempt to prevent a breach, or seek court guidance in a recurring situation.

Joining an action while dissenting

In Minnesota, for example, subject to trust terms and mandatory rules, a dissenting trustee joining a majority-directed action avoids liability if any cotrustee was notified at or before the action, unless it is a serious breach. Other states differ.

In Oregon, a dissenting cotrustee joining at the majority's direction avoids liability if any cotrustee was notified at or before the action, unless it is a serious breach of trust. Other states differ.

In Wisconsin, a dissenting trustee joining at the majority's direction avoids liability if all cotrustees were notified at or before the action, unless it is a material breach of trust. Other states differ.

Oregon's protection for not joining another cotrustee's action remains subject to reasonable care to prevent and compel redress of serious breaches. Wisconsin's corresponding protection remains subject to those duties for material breaches.

Delegation requirements differ by state

In Oregon, unless trust terms prohibit delegation, a cotrustee may delegate a function to another cotrustee who accepts it. Both delegation and acceptance must be written. Other states differ.

The delegation ends under its terms, by the delegator's written revocation, or by the recipient's written termination.

In Florida, cotrustees cannot delegate functions the settlor reasonably expected them to perform jointly, except investment functions delegated in compliance with section 518.112. A cotrustee may revoke a delegation. Other states differ.

Ordinary investment delegation under subsection (1) must concern functions a comparable prudent investor might delegate. It requires reasonable care, judgment and caution in selecting the agent, setting delegation terms and periodically reviewing the agent's actions.

For a trust or estate, subsection (3)(b) also requires written notice within 30 days to beneficiaries eligible for distributions or their legal representatives, unless eligible beneficiaries entitled to notice waive it.

Subsection (2) separately permits specified life insurance delegations without continuing review. Detailed eligibility and procedures for that exception require a separate review.

Two related terms

Nonjudicial settlement agreement: In Minnesota, for example, this is a binding trust settlement among persons whose consent would be needed for court approval, valid only if it preserves material trust purposes and contains terms a court could properly approve. Other states differ.

Trust director: In Florida, this means a person granted a power over a trust by its terms, to the extent that power is exercisable while the person is not serving as trustee. Other states differ.

Common questions