Do All Trustees Have to Agree to Sell Property?

When a trust ends up with three or more trustees, decision-making becomes more difficult, and the trustees are faced with a dilemma, do all trustees have to agree to sell property?

In cases like these, we first look at the trust document. Does the trust document provide a system for making decisions? If yes, these provisions in the trust document would be controlling.

However, more often than not, the trust document, as drafted, normally contemplates only one trustee (usually the grantor) where decision-making rests on one person. When two or more trustees are appointed and the trust document is silent on how decisions are to be made, New York law provides a solution under Estates, Powers, and Trusts Law (EPTL) § 10-10.7.

If you are in a situation where you are asking do all trustees have to agree to sell property, it is likely that you need an attorney. We at the Law Offices of Albert Goodwin are here for you. You can call us at 212-233-1233 or send us an email at [email protected].

New York law on multiple trustees (fiduciaries)

EPTL § 10-10.7 states that, when there are two trustees, the power is to be exercised by them jointly. In this case, both trustees have to agree to sell the property. However, if there are three or more trustees, the power to decide to sell the property rests upon the majority. A disabled or absent trustee who did not take part in the decision or a dissenting trustee who expressed his dissent in writing to his co-fiduciaries will generally not be liable for the consequences of the majority decision.

When multiple trustees make a decision regarding the administration of a trust, it is always recommended to document this decision in writing and have the trustees who are approving the decision sign the document. This would prevent any trustee from denying or disclaiming their approval in the future. Usually, this document is embodied in the form of a resolution executed by the trustees.

Decision-making of multiple trustees as a practical matter

Selling property, whether real estate or shares of a company, requires many small decisions leading up to the sale. When there are multiple trustees who are all co-heirs and beneficiaries of the trust, it becomes difficult to make these small decisions, especially when these multiple trustees live in different states. It becomes even more difficult when other family issues and drama burden the decision-making process of selling the property, such as co-trustees who are co-heirs that are not talking to each other and have animosity towards each other.

These small decisions, such as hiring an appraiser, getting a broker, determining the fair market value, deciding to put the property for sale, accepting offers, or retaining lawyers, can be difficult to make when there are multiple trustees. It is almost impossible to get unanimous approval, but a majority vote is easier and feasible. When making decisions, where there is an acrimonious relationship between or among some trustees, ensuring that you have a signed resolution before taking any more steps forward will insulate the majority trustees from further litigation in the future. A resolution signed by the majority of the trustees in each and every step of the way will be evidence of the majority decision and will prevent a trustee from denying or disclaiming his decision in the future.

To sum up, in New York, do all trustee have to agree to sell property? No. A majority of trustees is enough.

A trust with multiple trustees who are co-heirs and beneficiaries can be a complicated matter. More often than not, these trustees are confused on how to proceed with their decision-making process and organize it in a documented manner. A lawyer with expertise on trust issues can help you in this case. Should you need assistance, we at the Law Offices of Albert Goodwin are here for you. We have offices in New York City, Brooklyn, NY and Queens, NY. You can call us at 212-233-1233 or send us an email at [email protected].

The Practical Mechanics of Trustee Resolutions

When multiple trustees act together, formalizing decisions through resolutions provides important documentation:

• Written form. Resolutions should be in writing, not just oral agreements.
• Specific action authorized. The resolution should describe what action is approved.
• Signatures of approving trustees. Each trustee who approves should sign.
• Date of approval. When the action was approved.
• Notation of objecting or absent trustees. Trustees who object should be identified.
• Attached supporting documents. Appraisals, valuations, offers, or other documents supporting the decision.

Resolutions protect approving trustees from later claims that they did not authorize the action. They also document the decision-making process for any later review.

Dissenting Trustee Procedure

A dissenting trustee who does not want to be associated with the majority's decision must take specific steps:

• Communicate the dissent in writing to the other trustees.
• Be specific about what action is being objected to.
• Provide reasons for the dissent.
• Maintain copies of the written dissent.
• Consider whether to petition the court for relief if the majority's action is improper.

Properly documented dissent protects the dissenting trustee from liability for the majority's actions. Without documented dissent, the trustee may be deemed to have approved the action through silence.

Co-Trustee Disputes and Court Involvement

When co-trustees cannot resolve disputes, court involvement may be necessary. Options include:

• Petition for direction. Asking the court to direct specific action.
• Petition for instruction. Asking the court to interpret trust provisions.
• Petition for removal. Seeking removal of a problematic co-trustee.
• Petition for accounting. Requiring an accounting that may resolve information disputes.
• Mediation. Court-ordered or voluntary mediation to resolve disputes.

Court intervention is a last resort but sometimes necessary when co-trustees are at impasse.

Common Areas of Co-Trustee Disagreement

Specific areas where co-trustees often disagree include:

• Investment strategy. Conservative vs. growth-oriented approaches.
• Distribution timing. Whether to distribute now or wait.
• Asset valuation. The fair market value of specific assets.
• Sale decisions. Whether to sell, when to sell, at what price.
• Beneficiary requests. How to respond to beneficiary requests for distributions or information.
• Professional engagement. Which attorneys, accountants, or other professionals to use.
• Recordkeeping methods. How detailed records should be maintained.

Trust Documents Addressing Multiple Trustee Decisions

Well-drafted trust documents address multiple trustee scenarios:

• Decision-making rules. Specifying whether decisions require unanimous, majority, or other approval.
• Tiebreaker provisions. Naming a specific trustee or third party to break ties.
• Specific authority allocations. Giving particular trustees authority over particular matters (one for investments, another for distributions).
• Successor trustee provisions. What happens if a co-trustee resigns, dies, or is removed.
• Removal mechanisms. How a co-trustee can be removed without court proceedings.
• Mediation or arbitration provisions. Required dispute resolution before court action.

Trusts drafted without addressing multiple trustee scenarios leave the trustees to figure it out, often through court proceedings. Better drafting upfront prevents these issues.

The Trust Protector Role

Some trusts include a "trust protector" with limited but important powers:

• Authority to remove and replace trustees.
• Authority to modify administrative provisions.
• Authority to resolve trustee disputes.
• Authority to change governing law or situs.
• Other specific powers tailored to the trust's needs.

The trust protector provides a check on trustee behavior without taking direct fiduciary responsibility for the trust's assets. The role is particularly valuable for long-term trusts where the original trustees may not always serve effectively.

Resignation as an Alternative

When a co-trustee finds the situation untenable, resignation may be appropriate. Considerations:

• The trust document's resignation procedures must be followed.
• A successor trustee should be in place before resignation.
• The resigning trustee remains responsible for actions taken during their service.
• Resignation may require court approval in some circumstances.
• Accountings for the period of service should be provided.

Resignation is a clean exit when a trustee cannot work effectively with the others. It's often preferable to continued conflict.

Practical Tips for Successful Co-Trustee Service

Co-trustees can improve their chances of successful collaboration by:

• Establishing clear communication protocols early.
• Holding regular meetings to discuss trust matters.
• Documenting decisions through written resolutions.
• Engaging professional advisors to provide neutral analysis.
• Following the trust document's procedures faithfully.
• Maintaining respectful working relationships even when disagreeing.
• Seeking mediation or counsel when impasses arise.
• Treating all beneficiaries fairly regardless of family dynamics.