Three reasons why appointing a sole trustee or executor can be a risky decision
When appointing executors for their Will or trustees for a trust, many people like the clarity of naming just one person. They believe it will allow faster decision-making and avoid delays or conflicts caused by executors or trustees disagreeing on key issues.
That’s the upside of having sole executors and trustees, but there are significant downsides too.
Major drawbacks
No back-up: If a sole executor or trustee dies or is unable to carry out their role, there’s no automatic replacement. Cumbersome court processes are required to appoint a new one – and this can be contentious when different people think they’re best suited for the role.
Overwhelming: The legal duties and paperwork involved in executries or administering a trust can put a heavy burden on one individual, increasing the risk of delays or errors.
Lack of oversight: Having two or more trustees or executors can provide confidence to beneficiaries that the role is carried out competently and fairly.
These downsides can too easily lead to expensive court procedures, higher tax bills or missed opportunities to save tax, or legal disputes around mismanagement.
Alternative options
For that reason, it’s popular to choose two or more trustees – perhaps one of them a family member and another one a professional adviser.
This provides both back-up and balance. Also, some types of trust require a minimum of two trustees in order to be legally valid.
Even when clients have originally appointed more than one trustee or executor, subsequent deaths or mental incapacity might have left them with just one – that’s why it’s also important to review existing deeds.
By updating an existing Will or trust to provide reinforcements for your executors or trustees, you can make life very much easier for them and your beneficiaries.
It’s certainly simpler than dealing with the three scenarios above.
