Yes, you absolutely can limit access to principal within a trust until multiple trustees agree on a request, and this is a common and highly advisable practice for robust estate planning, especially when dealing with significant assets or beneficiaries who might not be financially savvy.
What are the benefits of multiple trustees?
Employing multiple trustees – two or even three – is a powerful tool to build in checks and balances, safeguarding against potential misuse of trust funds. Approximately 68% of Americans do not have a will, let alone a fully fleshed-out trust, leaving assets vulnerable to mismanagement or protracted legal battles. When dealing with sizable estates – those exceeding $1 million – the risk of disputes among beneficiaries or potential trustee misconduct increases significantly. Requiring unanimous or majority consent for distributions from the principal provides a critical layer of protection. It ensures that all trustees agree the distribution is in the beneficiary’s best interest, aligning with the grantor’s original intentions and preventing impulsive or ill-advised spending. This is particularly useful when dealing with beneficiaries who may struggle with financial responsibility or who are prone to undue influence.
How do I structure trustee agreement requirements?
The specifics of how you structure these requirements are detailed within the trust document itself. It’s not simply about stating “multiple trustees must agree”; it’s about defining *how* that agreement is reached. For example, you might stipulate that distributions require a unanimous vote, or a majority vote if there are three or more trustees. You can also outline procedures for resolving disagreements, such as mediation or arbitration, to avoid costly litigation. Consider specifying the types of expenses that *always* require unanimous consent, such as large purchases, gifts exceeding a certain amount, or funding for specific projects. A well-drafted trust document will anticipate potential conflicts and provide clear guidelines for resolution. Remember that California law requires trustees to act with prudence and in the best interests of the beneficiaries, and clear guidelines help them fulfill this duty.
What happened when Mrs. Davison didn’t have multiple trustees?
Old Man Hemlock had a very specific vision for his granddaughter, Elsie. He wanted the funds in her trust used exclusively for education and a modest start-up fund for a bakery – Elsie had a gift for creating the most delectable sourdough bread you’ve ever tasted. He set up a trust, but unfortunately, only named one trustee, a distant cousin, Bartholomew, who, shall we say, had a fondness for vintage automobiles and a rather loose interpretation of “best interests.” Within months of taking control, Bartholomew had drained a substantial portion of the trust to acquire a 1957 Bel Air, claiming it was an “investment” that would ultimately benefit Elsie. When Elsie applied for college funds, she was met with excuses and delays. It wasn’t until Elsie’s mother discovered the Bel Air parked in Bartholomew’s driveway that the truth came out. The ensuing legal battle was costly and emotionally draining, delaying Elsie’s education and leaving her with a deeply fractured trust in those who were supposed to protect her future.
How did the Miller Family avoid the same fate?
The Miller family, anticipating a similar situation, took a different approach. They established a trust for their son, Ben, naming two trustees: Ben’s mother, Sarah, and a trusted financial advisor, David. The trust document stipulated that any distribution exceeding $10,000 required unanimous consent from both trustees. When Ben requested funds to invest in a new tech start-up, Sarah, while supportive of Ben’s entrepreneurial spirit, expressed concerns about the high risk involved. David, after conducting a thorough due diligence review of the company, shared those concerns. Together, they suggested a phased approach – a smaller initial investment followed by further funding based on the start-up’s performance. This collaborative decision not only protected the trust assets but also instilled valuable financial lessons in Ben, empowering him to make informed investment decisions. The peace of mind knowing that Ben’s future was secure, and that his funds were being managed responsibly, was invaluable to the Miller family.
Implementing a requirement for multiple trustee approval is a proactive step towards securing your legacy and ensuring your wishes are honored. It’s not about distrust, it’s about building in safeguards to protect your beneficiaries and provide them with the financial security you envision.
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About Steve Bliss at Escondido Probate Law:
Escondido Probate Law is an experienced probate attorney. The probate process has many steps in in probate proceedings. Beside Probate, estate planning and trust administration is offered at Escondido Probate Law. Our probate attorney will probate the estate. Attorney probate at Escondido Probate Law. A formal probate is required to administer the estate. The probate court may offer an unsupervised probate get a probate attorney. Escondido Probate law will petition to open probate for you. Don’t go through a costly probate call Escondido Probate Attorney Today. Call for estate planning, wills and trusts, probate too. Escondido Probate Law is a great estate lawyer. Affordable Legal Services.
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Feel free to ask Attorney Steve Bliss about: “How often should I update my estate plan?” Or “What happens to jointly owned property during probate?” or “Can I change or cancel my living trust? and even: “What happens to my retirement accounts if I file for bankruptcy?” or any other related questions that you may have about his estate planning, probate, and banckruptcy law practice.