In the old days, trusts tended to be pretty simple. Typically, a trustee was expected to invest the funds conservatively and pay interest to a beneficiary at regular intervals. That was about it. Today, however, trustees are often expected to invest aggressively and successfully in a much more complex market. They may be subject to far more tax, compliance and regulatory requirements. And they may have to provide not for a single beneficiary but for a range of family members or generations, who may have conflicting interests.
Some states have begun changing their laws to encourage the use of “co-trustees”. The idea is to allow trustees to specialize. One can handle complex investments, while another takes care of the tax returns and paperwork. A third trustee might be a family member who is authorized to make decisions about distributions. A family member would be much more likely than a bank, for instance, to be aware that a relative has developed a gambling or drug problem and shouldn’t be trusted with large cash payments. [Read more…]