Successor Trustee Deadlocks: What Happens When Co-Trustees Refuse to Speak to Each Other
When successor co-trustees refuse to communicate, they may be unable to make important decisions about a trust. This disagreement, called a deadlock, can delay property sales, payments, and distributions to beneficiaries. In South Carolina, co-trustees generally make decisions by majority vote unless the trust provides otherwise. When only two trustees serve and cannot agree, mediation or court assistance may be necessary.
If the person managing a trust with you ignores your calls, withholds financial information, or refuses to discuss important decisions, you may struggle to fulfill your responsibilities. You may also worry about financial losses or whether you could face legal consequences for decisions you cannot make alone.
At Porter Law Firm, with offices in Mount Pleasant and Hilton Head Island, South Carolina, we help clients understand trusts and their legal responsibilities. We can review your trust documents, explain the rules governing trustee decisions, and provide guidance on your options. Contact us today to schedule a consultation.
What Happens When Successor Co-Trustees Refuse to Speak to Each Other?
A successor trustee is someone appointed to manage a trust when a previous trustee dies, resigns, becomes incapacitated, is removed, or otherwise stops serving. When two or more successor trustees serve together, they are called co-trustees.
If co-trustees cannot agree on decisions requiring their approval, neither automatically loses their authority. However, the disagreement can interfere with trust administration.
Important Trust Decisions May Be Delayed
Co-trustees may be unable to approve property sales, investment decisions, or other transactions that require their joint approval.
For example, suppose two successor trustees manage a house held in trust. One wants to sell the property, while the other refuses to discuss the sale. If both trustees must approve the transaction, the sale may not proceed until they reach an agreement or obtain appropriate court relief.
Trust Expenses and Financial Losses May Increase
A disagreement does not suspend the trust's financial obligations. Property taxes, insurance premiums, maintenance expenses, and other necessary payments may continue even when trustees cannot agree.
If the disagreement prevents timely action, the trust may face late-payment penalties, additional expenses, or losses from property damage. These costs can reduce the assets available to beneficiaries.
Trustees must continue fulfilling their legal responsibilities during a dispute, even when they cannot reach an agreement on every decision.
Beneficiaries May Have to Wait Longer for Their Inheritance
When trustees cannot agree on distributing assets, beneficiaries may have to wait longer to receive money or property.
However, trustees must follow the trust's instructions about when and how distributions should occur. If their disagreement prevents required payments or transfers, beneficiaries with an appropriate legal interest may seek court assistance.
Trustees May Face Legal Consequences
Refusing to communicate does not automatically constitute a breach of trust. However, deliberately obstructing necessary decisions or failing to perform required duties may violate a trustee's legal responsibilities.
Depending on the circumstances, a court may order a trustee to perform required duties, provide financial records, or take other steps to protect trust property and beneficiaries.
Can One Co-Trustee Act Without the Other's Approval?
Sometimes. Under South Carolina Code § 62-7-703, co-trustees who cannot reach a unanimous decision generally may act by majority decision.
For example, when three trustees serve, two may generally approve a decision. However, when only two trustees serve, neither can form a majority alone.
The trust document may establish different requirements. It might require unanimous approval for certain transactions, authorize a particular trustee to handle specified responsibilities, or permit appropriate delegation.
South Carolina law also provides a limited exception when a co-trustee is unavailable because of absence, illness, disqualification under other law, or temporary incapacity. If prompt action is necessary to achieve the trust's purposes or avoid injury to trust property, the remaining co-trustee may act.
Simply disagreeing with another trustee or receiving no response to a request does not automatically establish that the trustee is legally unavailable.
Before signing contracts, selling property, or distributing assets without the other trustee's approval, review the trust document and applicable law. Acting without proper authority could expose you to legal claims.
Can Refusing to Cooperate Make a Trustee Legally Responsible for Losses?
Yes, if the trustee's conduct constitutes a breach of trust. Trustees have fiduciary duties requiring them to manage trust property responsibly, follow the trust's instructions, and act in accordance with their legal obligations to beneficiaries.
A trustee may have legitimate reasons to oppose a proposed transaction, particularly if it could harm the trust financially. Disagreement alone does not establish misconduct.
However, deliberately blocking required actions, withholding information that must be provided, or neglecting administrative responsibilities may constitute a breach of trust.
If a breach causes financial harm, a court may order the responsible trustee to restore losses or return profits resulting from the violation.
South Carolina law generally does not make a co-trustee liable merely because another trustee acted improperly. However, under § 62-7-703, each trustee must exercise reasonable care to prevent a fellow trustee from committing a serious breach of trust and to compel that trustee to remedy a serious breach.
If you suspect another trustee is mishandling trust property, document your concerns and seek legal guidance before taking independent action. Your responsibilities do not necessarily end because another trustee refuses to cooperate.
How Can You Resolve a Disagreement Between Co-Trustees?
A trustee disagreement does not always require litigation. Depending on the trust's instructions and the nature of the conflict, several steps may help resolve the problem.
1. Review the Trust Document
Start by examining the provisions governing trustee authority, voting requirements, delegation, and dispute resolution.
The document may identify decisions requiring joint approval or authorize one trustee to handle particular responsibilities independently.
Clear trustee instructions are an important part of estate planning, as they can help prevent disputes over authority and decision-making.
2. Request Communication and Keep Written Records
If the other trustee refuses to respond, send a written request identifying the decision requiring attention, the information you need, and any relevant deadlines.
Keep copies of emails, letters, financial statements, and other communications. These records may help establish what steps you took to address the disagreement and fulfill your responsibilities.
If an urgent financial obligation or risk to trust property exists, document that concern specifically.
3. Consider Mediation
Mediation allows a neutral third party to help trustees discuss their disagreement and explore possible solutions. Unlike a judge, a mediator does not impose a binding decision.
For example, if trustees disagree about selling a house, they might agree to obtain an independent appraisal before deciding whether to proceed.
Any resulting agreement must comply with the trust's terms and the trustees' fiduciary duties. Mediation cannot authorize conduct that violates those obligations.
4. Ask a Court to Resolve the Disagreement
If the trustees cannot reach an agreement, a co-trustee or another person with an appropriate legal interest may seek court assistance.
Depending on the circumstances, a court may interpret the trust's instructions, determine trustee authority, order a trustee to perform required duties, or provide other appropriate relief.
Under South Carolina Code § 62-7-706, a court may remove a trustee when a lack of cooperation among co-trustees substantially impairs the administration of the trust.
This means removal does not necessarily require proof that a trustee stole assets or committed another serious breach. A sufficiently disruptive breakdown in cooperation may independently support removal.
However, personal disagreements alone do not automatically justify removing a trustee. The court must evaluate whether the statutory requirements are satisfied.
Our trust lawyers in South Carolina can review the trust agreement, identify which decisions require joint approval, and explain the legal options available when trustees cannot agree.
Get Legal Help Resolving a Successor Co-Trustee Dispute
When successor co-trustees cannot work together, resolving the disagreement may require reviewing their authority, documenting the conflict, and exploring mediation or court intervention. The appropriate approach depends on the trust's terms, the decisions being delayed, and any risks to trust property.
At Porter Law Firm, with offices in Mount Pleasant and Hilton Head Island, South Carolina, we serve clients throughout the state, including Charleston, Dorchester, Berkeley, and Beaufort counties. We can help you understand your responsibilities, review the trust's instructions, and evaluate your options under South Carolina law.
Contact us today to schedule a consultation and discuss your successor co-trustee dispute.
