As part of the legal framework for protecting the interests of beneficiaries, the law provides a process for removing and replacing trustees in certain circumstances. Trust administration laws are not the same in all states. In addition to governing law, the trust document may contain provisions that must be followed when attempting to remove a trustee.Although trustees can be replaced in some instances, it is not easy to remove a trustee. A court will not replace a trustee simply because a beneficiary is unhappy with distributions from the trust or a beneficiary does not like the individual appointed by the settlor. The party seeking to have the trustee removed must meet the required burden of proof. This article provides a list of reasons a trustee of an irrevocable trust may be removed and an overview of the process for seeking a change of trustee.
If a beneficiary, settlor, co-trustee or other interested person wants a trustee replaced, they will have to go through the legal process for removing the trustee and present evidence to meet the required burden of proof on why the trustee should be removed. Unless the trustee agrees to resign, the trustee may present evidence to refute any claims made by the party seeking to remove the trustee. If the trustee was chosen or appointed by the testator or settlor, courts have traditionally given substantial weight to that selection. It may be more difficult to remove a trustee that was chosen by the testator or settlor than a trustee that was not named by the person making the trust. Also, if the trustee has made small mistakes or been neglectful in a way that is deemed minor or insignificant, the court is likely to leave the trustee in place.If you are a beneficiary or other person with an interest in a trust and believe the trustee has committed a serious breach, neglected trustee duties, mismanaged trust assets, misappropriated trust funds, acted contrary to the best interests of the beneficiaries, failed to effectively administer the trust or committed some other violation of the trust or the trustee's fiduciary duties, you may want to learn more about how to remove a trustee. If there is no specific breach or violation by the trustee, but there has been a substantial change in circumstances that may support a change of trustee, you may be able to take action to remove the current trustee. Also, if you believe the trustee is unfit or unwilling to properly administer the trust, you may want to consult a lawyer about legal action to remove the trustee. For more information, refer to our heirs and beneficiaries page.If a trustee has engaged in actions that warrant removal, other remedies may be available from the court as well. For example, the court may order the trustee to provide an accounting, restore property or refrain from certain actions. The court may limit or reduce the trustee's compensation and order other forms of relief. In order to protect trust property, the court may appoint a special fiduciary to take over trust administration duties.In some instances it may be possible to have the trust provisions changed in a manner that allows for the trustee to be removed. To determine if trust modification is an option, consult a lawyer. Finding an attorney.
Who Can Bring Action to Remove a Trustee?
The right to bring action to remove or replace a trustee is limited. Only those with the required legal status will be able to successfully petition the court to change the trustee. This type of action typically can only be brought by a beneficiary, settlor, co-trustee or other interested person. For example, if you are an heir of the settlor but you are not a beneficiary, you may not have the required legal standing to remove the trustee. Whether you meet the requirements to petition for trustee removal will also depend on the type of interest you possess, such as whether you are a qualified or non-qualified beneficiary. See
right to information about trust.The specific requirements for legal standing to remove a trustee vary depending on applicable state laws, trust provisions, type of trust, etc. The trust instrument may provide that a beneficiary, trust protector, or other party has power to remove a trustee in certain circumstances. Some trusts contain portability clauses that allow beneficiaries to replace a corporate trustee without going to court. Review the trust document thoroughly to determine if it discusses how to remove a trustee. Consult a lawyer for more information on whether you have the required legal status to file for a change of trustee.
How to Remove a Trustee
The following is a list of steps involved in removing a trustee:1. Collect all documents and information that may be relevant to an action to remove the trustee. You will need valid reasons for removing the trustee.2. Consult an attorney with experience in trusts and estates about whether you can have the trustee removed. The attorney may need to review the trust documents and any communications, reports, and other items received from the trustee.3. If the trustee is removed, a new trustee may need to be appointed, unless you are seeking the removal of a co-trustee and only one trustee is required. You and your attorney may need to discuss whether a Successor Trustee is available that would be suitable to the court.4. If your attorney determines you may be able to remove the trustee and you decide to proceed with legal action, you will need to make arrangements with the lawyer on how legal fees and expenses will be paid.5. Your attorney may contact the trustee in an effort to settle the trust dispute without litigation.6. If the matter cannot be resolved without judicial intervention, your attorney may file a complaint or petition for trustee removal with the
probate court or other court with jurisdiction. Some courts provide forms that can be used to petition for trustee removal or appointment of a successor trustee.7. In a trustee removal proceeding, the trustee may respond and defend against any claims that the trustee should be removed.8. The court may grant the petition for removal or deny the petition. If the court issues an order to remove the trustee, the court may appoint a successor trustee or a temporary trustee.Whether the trustee can be removed and the steps required to appoint a new trustee will depend on several factors, including the type of trust, the state laws applicable to the trust, the party seeking to remove the trustee, the facts of the case, and how the trustee responds to the request that the trustee be removed.
Reasons for Removing a Trustee
When a petition is filed to remove a trustee, the court will determine whether there is a valid reason for removal. This will depend on a variety of factors, including applicable laws, provisions in the trust documents, and evidence presented to the court. Some of the most common reasons or grounds for removing a trustee include:1. The trustee has failed to adequately and effectively perform the duties of
trust administration.2. The trustee has committed a serious breach of the trust or breached a fiduciary duty in administering the trust.3. The trustee is not serving the best interests of the beneficiaries or is acting in the trustee's own self-interest.4. A substantial change in circumstances warrants removal of the trustee. For example, the trustee moved to a new location.5.The trustee has neglected or mismanaged trust assets resulting in losses or made improper investments. See
trustee investment duties.6. The trustee has disagreements with co-trustees or fails to cooperate with co-trustees, resulting in an inability to effectively administer the trust. This may include situations when co-trustees cannot reach agreement on decisions required to administer the trust.7. The trustee is insolvent, incapacitated, unfit or unwilling to effectively administer the trust.8. The trustee failed to provide a Trust Accounting as required.9. The trustee is receiving excessive compensation, making excessive or improper expenditures, etc. See fees trustees bill charge.These are some of the most common reasons for removing a trustee, but it is not a complete list of all the possible reasons a trustee may be removed. A court may find other causes for removing a trustee.However, even if you believe a trustee should be removed based on one or more of these grounds, that does not mean you will prevail in an action to remove the trustee. For each reason for removal, there are many factors the court may consider. When considering whether to remove a trustee, the court may look at whether removal of the trustee is consistent with the terms and purposes of the trust. Serving the best interests of the beneficiaries is paramount in determining whether there should be a change of trustee. Before removing a trustee, the court may also need to ensure a suitable successor trustee is available.Only a licensed attorney familiar with the laws applicable to the trust and the trust provisions can advise on whether you have a sufficient basis to remove a trustee. An action to remove a trustee can be handled by a probate lawyer.
Should You Try to Remove the Trustee?
When evaluating whether to try to remove a trustee, it is important to consider the consequences, which you may have to live with for a long time, depending on the duration of the trust. Here are some key points to consider before threatening to have a trustee removed:1. What does the trust instrument say about removing and replacing the trustee?2. Has the trustee violated the trust provisions or applicable state laws?3. Are there other circumstances that support removal of the trustee based on the trust provisions or governing law?4. Do you have adequate records or documentation to support your argument that the current trustee should be replaced?5. Can you pay the attorneys' fees, costs, and other expenses associated with legal action to remove the trustee in the event such costs and expenses are not reimbursed?6. How will your relationship with the trustee be impacted by an adversarial action to have the trustee removed?If you want to pursue an action to remove the trustee after considering these issues, the next step is to contact a trust and estates attorney about your rights and the likely outcome in this type of trust litigation based on the unique circumstances of your case.
Documents to Remove a Trustee
To petition the court to remove a trustee, you may need the following documents:1. The trust documents;2. Decedent's last will, if applicable;3. Annual reporting, interim reporting, and related documents and information provided by the trustee;4. All correspondence with the trustee;5.
Schedule K-1 forms and all other tax forms related to the trust.6. Any other documents, records, or other information related to the trustee's administration of the trust.7. Any materials that support your argument that a new individual or institution should be appointed as trustee.8. If other beneficiaries or interested persons support removing the trustee, documentation may be needed from them as well.Consult a lawyer for instructions on the documents and information you will need to present when requesting a change of trustee. The evidence required for trustee removal varies by state, type of trust, and a variety of other factors.
The Cost to Remove a Trustee
Anyone considering legal action to remove a trustee should be aware of the costs and the potential impact to the trust. When legal action is filed to remove a trustee, the trustee may vigorously contest it. Depending on the outcome, the fees and expenses for the trustee's defense may be reimbursed by the trust. Also, if a court finds you brought legal action without valid grounds, you could be ordered to pay legal fees and costs.Review state laws applicable to the trust dispute before taking action. Laws on reimbursement of a trustee's legal fees and expenses vary from state to state. Whether the trustee's defense costs will be reimbursed will also depend on whether the trustee is found to have breached the trust, engaged in any wrongdoing, etc. The court may order legal fees and expenses to be paid by any party or to be paid from trust property. If the court finds in favor of the trustee, the trustee's fees and expenses will typically be reimbursed by the trust.Fees and expenses for trust litigation can quickly deplete trust assets. Even if the arguments for removing a trustee are valid, will and trust disputes can be very costly. Depending on the size of the trust, a dispute over the trustee could reduce distributions to beneficiaries and harm the interests of those intended to benefit from the trust. Ask your attorney for an estimate on how much it will cost to bring an action to remove the trustee.
U.S. Laws on Trusts and Trustee Removal
In the U.S., the laws applicable to removal of a trustee are the state laws governing the trust. Currently, 32 states have enacted the Uniform Trust Code, which contains provisions on removal of a trustee. For a list of state trust laws, go to our Trust Law page.Published by Pennyborn.com on September 14, 2018.
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