Succession of Trustees
The trust terms dictate the succession of trustees, and this succession may go beyond simple ability or willingness to serve. It is not uncommon, for example, that a trust document appoint a successor trustee upon the happening of an event or condition precedent, such as when a person comes of age, or when a person is separated from a family by termination of marriage. The Trustee serving may be willing and able to serve, but may be replaced by a Successor Trustee when the Successor Trustee attains a certain age, or if the Trustee's marriage is terminated.
Co-Trustees
Many trusts refer to Co-Trustees. A Co-Trustee is simply two or more persons serving as together as trustee at the same time. Co-trustees may be empowered to act independently or may be required to act concurrently or in concert. Simply, a Co-Trustee that is empowered to act independently may act alone, and only one Trustee's signature may be required to take action, while Co-Trustees that act concurrently or in concert must agree, and the signatures of both Co-Trustees will normally be required to act.
Additional Trustees
Many trust documents refer to additional, separate Trustees. Reference to these additional trustees may cause confusion for laypersons, as they are typically defined in the trust document only by context. In other words, the trust document identifies who may serve as a separate or additional trustee, and may describe the authority of these Trustees, but rarely do these documents explain the purpose or objective they serve in the overall plan. This confusion sometimes causes dispute when a separate or additional trustee misinterprets their role and begins making demands of the trustee or attempts to exercise general power or authority over a trust or its assets.
Special Trustees
A Special Trustee is someone who is entrusted with exclusive or non-exclusive authority over a particular Trust asset or area of decision-making. The most common reason for a Special Trustee is to protect an asset or asset class, usually because that asset or asset class requires special expertise. There are two common situations where Special Trustees are employed by a trust. The first is where a family member serving as a Trustee is dealing with a family member, or himself, or herself in administering the trust assets; when a trustee is selling the family home to a sibling beneficiary. Although lawful, the conflict of interest may best be resolved, or may require appointment of a Special Trustee to prosecute the sale.
Another common situation is where the assets include a specialized or professional business, for example a medical, legal or financial practice. A professional medical corporation may be owned by a trust, but the law may restrict the ownership of the corporation to a licensed physician. Thus a surviving non-licensed spouse may serve as Trustee of the Trust, but another person who has the required license may be needed to serve as Special Trustee who winds-up the affairs of the practice, sells the practice assets and transfers the net cash proceeds into the name of the Trustee.
Even non-professional businesses may involve a Special Trustee. Farmers, for example, may desire that one child oversee the administration of all of the assets, but may desire that a person with farming experience and expertise oversee administration of the farm and farm assets. Our office has worked with clients that wanted Special Trustees to oversee the administration of business assets, to oversee the treatment and disposition of exotic animals such as exotic birds, ostriches, and cutting horses, and to oversee administration of unique assets such as artwork, copy-righted publications, antiques, and in case, a train.
Trust Protectors
A Trust Protector is someone who is entrusted with exclusive or non-exclusive authority to protect a particular beneficiary or class of beneficiaries, usually because of vulnerability and/or inability of the beneficiary or beneficiaries to protect themselves. Beneficiaries that are minors, or suffer from disability or impairment may require special protection since they are unable to protect themselves. A Trust Protector is not, usually, involved in the day to day management of the Trust or its assets, but is typically empowered to oversee the Trustee. A Trust Protector may be empowered to terminate a Trustee, replace a Trustee, or nominate and appoint additional Successor Trustees. A Trust may confer to Trust Protectors additional authority to ensure that the Trust continues to work in the best interest of the beneficiaries, by, for example, authorizing a Trust Protector to petition the court to amend or reform the Trust document.
Trust protectors are commonly used in Supplemental Needs Trusts and in wholly discretionary Trusts where the Trustee has complete discretion whether or not to distribute assets to the beneficiary. A Trust Protector is an alternative to requiring an advocate on behalf of a vulnerable beneficiary to seek and obtain legal authority to represent the beneficiary, and then protect the beneficiary formally, legally through court processes. Like probate administration of assets, these legal processes bear cost and expense, including the uncertainty of outcome, time, and legal expense.
