Naming a Spouse or Partner as Trustee
Most of our clients have opted to utilize family members (i.e. spouses, partners, adult children, parents, siblings, close family friends, etc.) as their disability or death trustees. Traditionally, attorneys are taught in law school that when creating an estate plan for a couple, you should always name the spouse or partner as the sole disability or death trustee.
In the real world, naming your spouse or partner as the sole disability or death trustee has the potential to create some problems. For example, in the event of a disability, the healthy spouse or partner typically spends the majority of their time providing care and serving as a health care advocate for the disabled spouse or partner. Thus, the one person who may be uniquely unable to serve in this role could be the healthy spouse or partner.
Some clients have opted to utilize a “wait-n-see” approach that adds additional flexibility for the spouse or partner. This approach involves naming the spouse or partner along with another person to serve as co-trustees on both disability and death. The spouse or partner is given the ability to assess the situation, their own ability to serve without assistance, and to what extent (if any) they want assistance from the co-trustee.
Another advantage of the wait-n-see co-trustee approach is the added benefit of an additional set of eyes and ears present at all meetings with professional advisors (i.e. attorneys, CPAs, Financial Advisors, etc.). This can be particularly helpful for a spouse or partner that is working through a difficult grieving process.
Grief and mourning affect each of us differently depending on the situation. In some cases, we find that a grieving spouse or partner can be physically present at various meetings but mentally their grief is clouding their ability to understand and retain information or make sound objective decisions. Having a co-trustee present may help to minimize this risk.
Additionally, the person that is selected as the co-trustee to serve with the spouse or partner is often the same person that will be responsible to wind down the affairs of the surviving spouse or partner. We have found the process of winding down the estate of the surviving spouse or partner is significantly easier for the backup trustee if they have already had some experience when they were serving as a co-trustee.
It should be noted that “co” does not mean “equal”. Simply because someone is named as a co-trustee with a spouse or partner does not mean the spouse or partner loses control of the family financial affairs. In fact, most clients that opt to utilize this approach often include provisions in their trust that give the spouse the power to veto or even remove a co-trustee.