Can a trust be a trustee of another trust?

No, a trust cannot be a trustee of another trust. However, the trustee of one trust may also act as the trustee of other trusts.

The Florida Trust Code does not put limits on who can be a trustee. This is unlike the role of personal representative, which cannot be done by just anyone. However, part of being a trustee is being a fiduciary. And a trust cannot act as a fiduciary; the trustee does that. In fact, a trust cannot do anything on its own. Everything that a trust does is actually done by the trustee.

To illustrate why this distinction matters, imagine two trusts: Trust A and Trust B. Now imagine that Trust A is the trustee for Trust B and that Trust B is the trustee for Trust A. Now, how does Trust A manage assets? It can’t! There is no one to do the job because all we have are entities on paper. There’s no one to actually do any work. What we need is a person to get involved to manage things. And that’s why we do not name trusts as trustees.

So, you cannot make one trust the trustee of another trust. But you can make one person the trustee for multiple trusts. Imagine that Trust A and Trust B both have Tim as trustee. This is allowed! As long as there is no conflict of interest involved, Tim can manage both trusts and be a good fiduciary to all the beneficiaries.

Although a trust cannot be trustee, a trust can be a beneficiary of another trust. This happens all the time. For example, imagine that you set up a living revocable trust. But after you pass away, you have some assets move into a special needs trust for the benefit of your disabled child. In this situation, the special needs trust is a beneficiary of the revocable living trust. Therefore, a trust can be the beneficiary of another trust, but not the trustee of another trust.

If you are trying to set up a trust or perhaps have some complicated set of trusts that you are interested in creating, it might be beneficial to sit down with a trust attorney for a free consultation.