Blended family trust trustee: keeping neutrality between two households

A blended family trust is rarely difficult on the day it is signed. The difficulty arrives later, when a surviving spouse and the settlor's children from an earlier relationship discover that they depend on the same decision-maker. The trustee you choose determines whether that moment is handled calmly or becomes the start of a long dispute. This page looks at the question from one angle only: what neutrality means for a blended family trust trustee, and how to judge it before you appoint.

It is general information, not advice. The right answer depends on where each person lives, what the trust holds and what the trust deed says, so it always needs an individual analysis.

Why a blended family puts pressure on the trustee

In a single-household family, beneficiaries usually share a history and a rough sense of what is fair. In a blended family the groups often do not. A second spouse may need housing and income for decades. Children from the first marriage may expect the capital to reach them intact. Both expectations are reasonable, and they pull in opposite directions.

A trust does not remove that tension; it moves it onto the trustee. The settlor is no longer present to explain intentions, so every distribution, every refusal and every delay is read through the lens of loyalty. A trustee who is seen to lean towards one household loses the trust of the other, whatever the reasoning behind the decision.

That is why trustee selection matters more here than in most other situations. Many of the worst outcomes come from an appointment made for convenience, such as a close friend of the second spouse or an adviser who has worked mainly with one branch, rather than for the ability to stay level.

What "even-handed" actually means

Neutrality is often misunderstood as treating everyone equally. It does not mean equal shares. A trustee of a discretionary trust may lawfully favour one beneficiary over another when the deed and the settlor's wishes support it. What the trustee must not do is decide on the basis of personal preference, pressure, or who is easiest to deal with.

In practice, even-handedness rests on a few habits:

• Reading the deed, not the loudest voice. Decisions follow the purposes written in the trust deed and any letter of wishes, not the persistence of a particular family member.
• Giving reasons. A recorded, consistent rationale for each decision lets both households see that the same standard was applied.
• Informing both sides on the same terms. What each beneficiary may see is set by the deed and the applicable law, as described in what a trustee owes the beneficiaries; the trustee should apply that rule identically.
• Having no stake. The trustee should not be a relative, a creditor of the family, or dependent on one household for other business.

The first conflict is the real test

Most blended-family trusts work smoothly until the first conflict. It is usually small and predictable: a request to renovate the family home, a distribution to a stepchild's business, a decision about selling an asset the second spouse lives in, or a question about who may see the accounts.

The example below is fictional and only illustrates the pattern. A family in Lausanne has a trust funded by a widower, now deceased. His second wife lives in the house held by the trust; his two adult children from his first marriage are capital beneficiaries. When the roof needs replacing, the wife asks the trustee to pay for it from trust capital. The children object that this reduces what they will eventually receive.

A neutral trustee does not choose a side. They check whether the deed allows capital to be used for the property, ask what the settlor's purpose was, document the competing interests, and decide with reasons that both sides can read. If the deed is silent or unclear, the trustee should say so openly and, where the deed provides for it, involve the protector. Where a decision is genuinely contested, the trustee may seek legal guidance on the point.

How the trustee's duty to each group is structured

The diagram below shows, as a series of questions, how a trustee in this position should think about the groups of beneficiaries and the even-handed duty. It is a simplified aid, not a legal test.

What a trust can and cannot do for a blended family

A trust can separate management from benefit. It lets a surviving spouse have the use of a home or an income for life, while the capital is kept for children from an earlier marriage. It can name a neutral professional trustee so that neither household controls the assets. It can also set out written purposes that the trustee must follow after the settlor has gone.

A trust cannot override mandatory inheritance rules. Under Swiss law, forced heirship still matters. The reserved portion is half of the inheritance entitlement (Art. 471 of the Civil Code), and it applies to someone who leaves descendants, a spouse or a registered partner (Art. 470, para. 1). Parents are no longer reserved heirs. The revised succession law took effect on 1 January 2023, and the Federal Office of Justice presents it as allowing people to dispose freely of a larger share of their estate. The Hague Trusts Convention, which Switzerland applies to trusts through Art. 149c of the Private International Law Act, also preserves mandatory rules on inheritance rights (Art. 15 of the Convention).

In plain terms, a trust may be challenged if it is set up in a way that cuts into protected shares. The detailed tax and succession analysis belongs with specialist advice; here the point is that a trustee in a blended family must understand these limits, because they shape what can be promised to each household.

How to judge a trustee's neutrality before you appoint

You can test neutrality before signing. Useful checks include:

• Does the candidate have a clear policy on conflicts of interest, and will they describe it in writing?
• Is the trustee independent of both households, with no personal or financial tie to either?
• Has the candidate handled trusts where beneficiaries disagreed, and can they explain how decisions were recorded?
• Is the trustee authorised and supervised? FINMA and SO-FIT approval tells you who oversees them, though it is not a measure of fairness.
• Would the trustee accept a protector with defined powers? See working with a protector and trustee with or without a protector.

A fuller approach is set out in due diligence on your trustee. If you are comparing a family member with a professional, individual or corporate trustee explains the trade-offs. Fees depend on the structure and are communicated after the confidential assessment.

Alternatives and complements

A trust is not the only tool. Depending on the family, a will, an inheritance agreement or a marital property arrangement may deal with part of the problem more simply. Some families combine a trust with another structure; see trustee in combined structures. Where one beneficiary needs particular support, trustee care for vulnerable and blended-family beneficiaries describes how the role adapts.

If a trust already exists and you suspect it is not being run evenly, a dispute between beneficiaries and the trustee or an independent review of an existing trust may be the right next step.

Points to check in your own situation

• Who are the beneficiary groups, and do their interests conflict?
• Does the trust deed state a purpose or priority between them?
• Is there a current letter of wishes, and does it match the deed?
• Is the trustee independent of every household?
• Are mandatory inheritance rules compatible with the structure?
• Is there a protector, and are the protector's powers written down?