What Are Co-Trustee Powers?

A Trust May Have Multiple Co-Trustees
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Trustees have a fiduciary responsibility to manage the property in a trust and are obligated to act in the interest of the beneficiaries. Trustees may be individuals, or entities such as banks. A trust may name more than one trustee. In the instance of multiple trustees, each trustee has duties and powers related to the trust and to the co-trustees.

Equal Powers

Unless the trust document states otherwise, all co-trustees have equal power and equal duties to the trust.

Co-Trustee Agreement

Co-Trustees usually work in conjunction with, and with the approval of, the other co-trustees. This means that one co-trustee cannot make a decision about trust property without the express, unanimous approval of the other co-trustees. Sometimes the trust will make exceptions to this rule, such as when a co-trustee is ill and cannot make decisions, or when the trust expressly allows one trustee to make certain decisions alone.

Disclosing Trust Information

Each co-trustee has a responsibility to disclose information relating to the trust to the trust beneficiaries. This information must be disclosed in a timely manner and a co-trustee does not have to ask the approval of the other co-trustees before disclosing trust information to the beneficiaries.

Co-Trustee Liability

All co-trustees have certain fiduciary duties, including the duty to act in the best interest of the beneficiaries and the duty not to self-deal with the trust assets. A breach of any fiduciary duty by a co-trustee may result in legal liability to the trust. In certain circumstances, a co-trustee can be liable for breaches by other co-trustees. This may be true even if the non-breaching co-trustee did not have actual knowledge of the breach. Co-trustees have the right to demand full disclosure from all co-trustees. Full disclosure requires all co-trustees to tell the other co-trustees about any personal interest they may have in an investment decision involving the trust assets. A co-trustee must report any suspected breaches by co-trustees to the trust beneficiaries immediately.

Read More: How to Add a Co-Trustee of Irrevocable Living Trust

Right to Sue Co-Trustees

A co-trustee has the right to sue another co-trustee if she reasonably believes a breach has occurred. The co-trustee may file the lawsuit as an individual or as a representative of the trust. The particular circumstances of the breach will determine how to bring the lawsuit and in whose name to sue.

Right to Resign

A co-trustee may resign from the trust at any time. The trust document will provide the procedure for resignation and for replacing the resigning co-trustee.

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