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Question about the duties of two co-trustees

New York, NY |

A trust has two trustees.

It comes to light that the trust has not been paying state taxes on trust capital gains.

Question: Are both trustees equally responsible for this omission. If one trustee is passive and the other is the active administrator, is the passive trustee equally responsible.

In this case, the active trustee has died. I want the passive trustee to pay the penalties and interest on the back taxes out of his own personal funds not the funds of the trust. He is blaming the co-trustee who died for making the mistake because, he says, the deceased trustee controlled the trust administration of the trust during the time they were co-trustees..

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Attorney answers 3

Best Answer

Both trustees have an equal fiduciary duty to manage the trust assets. Just being passive does not shield from liability. I would suggest consulting an attorney here. Good luck.

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Unless specified otherwise in the trust documents, each trustee has equal responsibility and accountability.


I agree with my colleagues. Although Im licensed in NY, I practice in California. In California the code specifically provides that a co-trustee has a duty to seek to redress breaches of a co-trustee. There is no recognizable "Ostrich" defense.

The general advice above does not constitute an attorney-client relationship: you haven't hired me or my firm or given me confidential information by posting on this public forum, and my answer on this public forum does not constitute attorney-client advice. IRS Circular 230 Disclosure: In order to comply with requirements imposed by the Internal Revenue Service, we inform you that any U.S. tax advice contained in this communication (including any attachments) is not intended to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein.

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