Should You Name Your Adult Child Co-Trustee?

A critical aspect of proper estate planning is the Financial Power of Attorney document. However, if you have created a revocable living trust, assets that are titled in the name of the trust are managed by the named trustee, not your power of attorney. Because of this, one common question that arises is whether to name an adult child as a co-trustee. Naming a child co-trustee is different from listing them as a successor trustee where the primary trustee must step down or be unable to serve for a successor to serve. I have seen some clients consider this change to naming a co-trustee after one spouse has passed away and the surviving spouse is considering their financial future.

The Pros of Naming Your Adult Child as Co-Trustee

1)      Simplicity: They can begin acting immediately or when you need them to. You don’t have to officially step down or be deemed unable to serve, which can take some time to complete when there has been a health incident.

2)      After-death transition: If a child is named as a co-trustee early on, they will likely become more aware of all aspects of your finances, allowing them to facilitate the distribution of assets more efficiently after you pass away.

The Cons of Naming Your Adult Child as Co-Trustee

1)      Privacy: A co-trustee typically has access to many areas of your finances so if you want to maintain privacy, it may be difficult to do so.

2)      Security: A co-trustee typically can make financial decisions on your behalf. Because of this, it is important to completely trust their decision-making. However, most of the time the child is already listed as a successor trustee, and as one attorney pointed out to me, if you don’t trust them now while you can check on them, why would you trust them once you are incapacitated or dead?

3)      Family Dynamics: While family involvement can be a positive aspect, it can also lead to friction and conflicts, especially if there are disagreements over trust decisions.

The decision to name your adult child as a co-trustee in your estate plan is not one to be taken lightly. It comes with both advantages and disadvantages, and the suitability of this choice depends on your unique circumstances, family dynamics, and the complexity of your assets. It’s important to talk openly with your children about your expectations, provide them with the necessary education and resources to fulfill their responsibilities effectively and have contingency plans in place in case they are unable to continue in this role. If you are considering naming your adult child as a co-trustee, you should consult with an attorney to discuss your specific situation.

Happy Planning,

Alex

This blog post is not advice. Please read disclaimers.