Naming more than one trustee seems like a safe choice. You get a check on power, a division of labor, and a way to balance competing family interests. In theory, co-trusteeship is the governance equivalent of a two-key launch system: nothing happens unless everyone agrees.
In practice, it is the governance equivalent of handing two people a steering wheel and hoping they want to go the same direction.
When co-trustees stop communicating, block distributions, or dig into opposing positions on investment strategy, the trust does not slow down. It stops. Tax filings get missed. Property sits unmanaged. Beneficiary requests go unanswered. And the deadlock itself, the failure to act, becomes a breach of fiduciary duty that exposes every co-trustee to personal liability, including the one who wanted to act but could not get the other to sign.
Here is what the law actually says about co-trustee decision-making, where deadlocks cause the most damage, and how to break them before a beneficiary files a petition for removal.
The Default Rule: Unanimous Consent, Unless the Trust Says Otherwise
Most trustees assume that if they disagree, they can simply take the matter to a majority vote and move on. That assumption is wrong more often than it is right.
The Uniform Trust Code, Section 703, sets the default rules for co-trustee action. The key provision is deceptively simple:
Co-trustees who are unable to reach a unanimous decision may act by majority decision.
That sounds like a clean exit from gridlock. But it comes with a critical caveat that most states have adopted: when only two co-trustees are serving, unanimity is still required. Majority rule only works when there are three or more trustees, which is rare in family trusts. North Carolina’s statute, for example, states explicitly that “unanimity is required when only two are serving.” Massachusetts, Connecticut, and most other UTC-adopting states follow the same pattern.
This means the most common co-trustee structure, two siblings, or a family member and a professional trustee, has no default majority-rule escape hatch. If one refuses to act, the trust is stuck.
Older trusts make the problem worse. Trusts executed before a state adopted the UTC often require unanimous consent for all trustee actions, regardless of how many trustees serve. In Massachusetts, for example, trusts executed before July 8, 2012 default to unanimous consent unless the trust instrument says otherwise. Many trusts drafted in the 1990s and 2000s are still operating under that rule.
The trust document is the first place to look. Some instruments include their own deadlock-breaking mechanisms: a tiebreaker provision granting one trustee the casting vote on specific matters, a trust protector with authority to resolve disputes, or a requirement to consult a named advisor whose recommendation is binding. But many trust documents say nothing about what happens when co-trustees disagree, which means the statutory default applies, and the statutory default often means unanimity.
Where Deadlocks Cause the Most Damage
Co-trustee disputes are rarely about one dramatic disagreement. They are usually a series of small conflicts that compound until the trust cannot function. Here are the five areas where deadlocks cause the most measurable harm:
1. Tax Filings and Deadlines
The IRS does not care that your co-trustee refused to sign the engagement letter with the accountant. Form 1041 is due every year, and the failure-to-file penalty is 5% of the tax due per month, capped at 25%. If the trust owes $50,000 in tax and the return is filed three months late because the co-trustees could not agree on who should prepare it, the penalty is $7,500. That penalty comes out of trust assets, which means the beneficiaries bear the cost.
If the IRS determines that the failure was due to willful neglect or reckless disregard, the penalty can be assessed personally against the trustee. In a deadlock, both trustees are exposed, the one who blocked the filing for willful reasons, and the one who failed to escalate to court or take alternative action to protect the trust. The duty to act prudently includes the duty to break a deadlock that is harming the trust.
2. Investment Decisions
One trustee wants to hold the concentrated stock position because it has appreciated 40% and carries low basis. The other wants to diversify immediately to comply with the prudent investor rule. While they argue, the stock drops 22%. The loss is real. The beneficiaries will ask why no one acted.
The Uniform Prudent Investor Act requires diversification unless the trustee reasonably determines that, given the circumstances, it is in the beneficiaries’ interests not to diversify. A co-trustee who blocks diversification without a documented, prudent basis is breaching the duty of prudence. But the co-trustee who recognizes the risk and does nothing to resolve the deadlock, through mediation, court petition, or seeking the other trustee’s removal, is also exposed. Silence in the face of a known risk is not neutral conduct. It is a failure to act.
3. Beneficiary Distributions
Distribution disputes are the most common source of co-trustee deadlock, and they are the most likely to escalate to litigation. One trustee believes a distribution for a beneficiary’s graduate tuition is clearly within the HEMS standard. The other thinks the beneficiary should take out student loans and preserve principal. The beneficiary is caught in the middle, waiting for a check that never arrives.
Under most trust instruments, the trustee has discretionary authority over distributions. But discretion is not the same as veto power. A co-trustee who unreasonably blocks a distribution that clearly fits the trust’s distribution standard is breaching the duty of impartiality. The beneficiary can petition the court for a compelled distribution, and in some jurisdictions, for trustee removal based on the obstructive conduct.
4. Property Sales and Real Estate Transactions
Real estate sales almost always require signatures from all serving co-trustees, even in states that allow majority action on other matters. Financial institutions and title companies insist on full participation as a risk management policy, regardless of what the trust document says. A co-trustee who refuses to sign a listing agreement or a closing document can delay a sale for months, during which property taxes, insurance, and maintenance costs continue to accrue.
If the property is being sold to generate liquidity for distributions or to pay estate taxes, the delay can trigger additional penalties and interest. The co-trustee who refused to cooperate may face a surcharge for the costs caused by the delay, and the co-trustee who failed to seek court intervention to compel the sale may face a claim for failure to protect trust assets.
5. Accountings and Beneficiary Communication
The duty to inform and account runs to qualified beneficiaries at least annually. When co-trustees cannot agree on the accounting format, on what to disclose, or on whether to send it at all, the duty goes unfulfilled. This is particularly dangerous because the statute of limitations on trustee actions generally does not begin running until the beneficiary receives an adequate accounting. A deadlock over accounting keeps the liability window open indefinitely.
What Happens When Deadlock Persists: The Legal Escalation
When co-trustees cannot resolve a dispute internally, the matter does not simply fade away. It escalates, and the escalation follows predictable paths.
Petition for Instructions
Under UTC Section 201 and its state-law equivalents, a trustee can file a petition for instructions with the probate court, asking the judge to resolve a question about the administration of the trust. This is the cleanest escalation path because it does not require alleging that the other trustee breached a duty. The trustee is simply asking: “We disagree on this decision, and we need the court to tell us what to do.”
The court can issue an order directing specific action, which effectively resolves the deadlock. The trustee who follows the court’s order is protected from later claims that the action was a breach. The cost is legal fees and time, typically several months, but the outcome is definitive.
Trustee Removal
When the deadlock is caused by one trustee’s obstructive conduct rather than a genuine good-faith disagreement, removal becomes the remedy. UTC Section 706 and its state equivalents give courts broad authority to remove a trustee when removal serves the beneficiaries’ interests, when the trustee has committed a serious breach, or when the trustee’s conduct makes it substantially impractical to cooperate with co-trustees.
In Ramirez v. Rodriguez, 2020 Tex. App. LEXIS 1340, three co-trustees sued to remove a fourth trustee whose “pattern of creating hostility and friction” was impeding trust operations. The Texas Court of Appeals affirmed that hostility alone is not enough for removal, but hostility that affects the trustee’s performance or the trust’s proper administration is grounds for removal. The court denied the obstructive trustee’s motion to dismiss, allowing the removal claim to proceed.
The key legal standard, drawn from Akin v. Dahl, 661 S.W.2d 911 (Tex. 1983), is this: ill will or hostility between a trustee and beneficiaries is insufficient standing alone. But when that hostility affects the trustee’s performance, removal is warranted. Courts across jurisdictions apply the same reasoning under their own statutes.
Co-Trustee Liability for the Other’s Breach
This is the trap that catches well-meaning co-trustees. Under UTC Section 703(b), a co-trustee who dissents from a decision or participates in a breach by another trustee can be held liable if they failed to take reasonable steps to prevent the breach. Dissent alone is not a defense. A co-trustee who says “I disagreed with that distribution but went along with it” has not protected themselves. They have participated in the breach.
The duty to take reasonable steps includes: documenting the dissent in writing, seeking legal counsel, petitioning the court for instructions, and if necessary, petitioning for removal of the breaching co-trustee. A co-trustee who does none of these things and simply goes along with conduct they know is wrong is jointly liable for the resulting damages.
The Documentation Checklist for Co-Trustees in Disagreement
When a disagreement starts, your paperwork becomes your protection. If the dispute eventually reaches a court, the judge will look at what each trustee did to resolve it. Here is what to document from the first sign of conflict:
Log every communication. Every email, letter, phone call, and meeting with your co-trustee should be recorded with the date, time, method, and substance. If you sent a request for a decision and received no response within a reasonable period, document that silence. A pattern of unanswered communications is evidence of obstruction.
Record every decision and vote. When a decision is made, or blocked, write a memo to the trust file: what was proposed, who supported it, who opposed it, what the basis was, and what the outcome was. If the trust requires unanimous action and one trustee refused to act, the memo should state that the decision was not taken because unanimous consent was not obtained.
Preserve dissent in writing. If you disagree with a co-trustee’s proposed action, do not simply voice your objection and move on. Write a formal memorandum of dissent, state your reasoning, reference the trust document and applicable law, and deliver it to your co-trustee. If the action proceeds over your dissent, your written record is what protects you from joint liability.
Escalate formally. If informal negotiation fails, document the escalation: the date you proposed mediation, the date you consulted counsel, the date you filed a petition for instructions. Courts look favorably on trustees who took reasonable steps to resolve disputes before asking the court to intervene.
Track the costs of deadlock. Every dollar of penalty, every day of delayed distribution, every basis point of investment loss attributable to the deadlock should be quantified and documented. If the obstructive co-trustee is later surcharged, the court needs a number to work with. If you are defending yourself against a claim that you failed to act, the documented costs of the deadlock establish why escalation was necessary.
Drafting Solutions: What Trust Documents Should Include
If you are drafting a trust, or amending an existing one, the best time to solve the co-trustee deadlock problem is before it happens. Several provisions can prevent or resolve deadlocks without court intervention:
A casting vote provision. Designate one trustee, or a third party such as a trust protector, as holding a tiebreaking vote on deadlocked decisions. Specify which decisions are subject to the casting vote and which require genuine unanimity, such as amendments to the trust or termination.
A trust protector with dispute resolution authority. A trust protector is a third party named in the trust document with specific powers. One of the most useful powers is the authority to resolve deadlocks between co-trustees, either by casting a tiebreaking vote, by directing the trustees to a specific course of action, or by removing and replacing a co-trustee whose conduct is obstructive. For more on the governance role of trust protectors, see our analysis of directed trusts and the governance gap.
A mediation requirement. Before either trustee can file a court petition, require a good-faith mediation attempt. This gives both trustees a structured opportunity to resolve the dispute with a neutral facilitator, and it creates a record that both parties attempted to resolve the matter without court intervention.
A unilateral action safe harbor. For routine administrative matters, paying bills, filing tax returns, maintaining property, the trust can authorize either trustee to act independently without the other’s sign-off. This prevents deadlocks on day-to-day matters while preserving joint action for major decisions.
A removal provision. Some trust instruments grant a beneficiary, a trust protector, or a majority of co-trustees the power to remove a trustee without court intervention. This is the strongest deadlock-breaker, but it must be drafted carefully to avoid creating a power that one beneficiary can use to control the trust.
How TrustOffice Helps
Co-trustee deadlock is fundamentally a communication and documentation problem, and that is the problem TrustOffice was built to solve.
Shared decision records eliminate “he said, she said.” TrustOffice’s governance workflow records every trustee decision, vote, and dissent in a single system. When a co-trustee blocks a distribution, the block is logged with the date, the reason, and the trust provision cited. When a co-trustee dissents, the dissent is recorded in writing, protecting them from joint liability for decisions they opposed. No more reconstructing the timeline from email threads.
Documented escalation paths. TrustOffice tracks the escalation process from initial disagreement through mediation, counsel consultation, and court petition. Every step is timestamped and linked to the underlying dispute. If the matter reaches a judge, your record of reasonable efforts to resolve the deadlock is complete and organized.
Deadline tracking prevents the silent breach. Tax filings, accountings, distribution decisions, and property maintenance all have deadlines. TrustOffice tracks them and flags when a deadline is approaching without a recorded decision. The system prompts both co-trustees to act, and if one does not, the other has documentation that the deadline was known and the deadlock was the cause of the delay.
Cost tracking for surcharge defense. When a deadlock causes financial harm, penalties, investment losses, delayed sale costs, TrustOffice quantifies the impact and links it to the specific deadlock. If the obstructive co-trustee is later surcharged, the numbers are already compiled. If you are defending yourself against a claim that you failed to act, the documented costs establish why escalation was necessary and proportional.
Beneficiary communication that does not require unanimity. TrustOffice’s accounting module can generate and deliver annual accountings even when co-trustees disagree on format or content. The system produces a compliant accounting from the trust’s transaction record, logs the delivery, and starts the statute of limitations clock. The duty to inform does not wait for the deadlock to resolve.
The Bottom Line
Co-trustee deadlock is not a personality conflict. It is a governance failure with legal consequences. Every day the trust sits frozen, the co-trustees are accruing liability: penalties for missed filings, losses from unmanaged investments, breach claims from beneficiaries who are not receiving what the trust requires, and personal exposure for failing to take reasonable steps to resolve the dispute.
If you are a co-trustee in a deadlock, the worst thing you can do is nothing. Document the disagreement. Seek counsel. Propose mediation. If the other trustee refuses to engage, file a petition for instructions or petition for removal. The court will look at what you did to resolve the problem, not just at who started it.
If you are drafting a trust, include deadlock-breaking provisions before they are needed. A casting vote, a trust protector with dispute resolution authority, a mediation requirement, and a unilateral action safe harbor for routine matters can prevent the problem entirely.
And if you are administering a trust with co-trustees, use a system that records every decision, every dissent, and every escalation step. The trustee who wins the surcharge defense is the trustee who can prove they tried.
Book a free call to see how TrustOffice can manage co-trustee decision records, track deadlock escalation, and keep your trust administration moving, or subscribe for $79/month and start building your trust governance system today.
