The Guide to Trustee Succession and Resignation

Trustee succession is the process by which a new trustee takes over the role of managing a trust. Trustee succession may occur when a trustee passes away, becomes incapacitated, resigns, declines, or is removed from the position.

What is trustee succession?

The term “trustee succession” refers to the process of having a new “successor” trustee take over the administration of a trust. 

Many trusts are managed by their creators while they are still alive. When the original trustee dies or becomes incapacitated, a successor trustee will take over the management of the trust. Most commonly, successor trustees are the creator’s spouse, adult child, or an experienced professional trustee.  

Can I appoint a successor trustee while I’m still alive?

Yes, you can appoint a successor trustee while you are still alive.

Successor trustees are appointed according to the terms of the trust instrument. As the creator of the trust, you can specify who you want to serve as the successor trustee and take over the administration of the trust when you pass away or become incapacitated.  And if you want to specify another successor trustee you may be able to amend your trust to name your desired person.

What is trustee resignation?

The term “trustee resignation” refers to the steps a trustee can take if they wish to no longer administer a trust. 

California Probate Code §15640 only allows a trustee to resign as trustee using specific methods, so in some situations, offering a resignation letter will not be enough. If you wish to resign as the trustee of a trust, you should consult with an experienced trust attorney to ensure your resignation is effective.

How do I resign as trustee?

According to California Probate Code §15640,  a trustee may only resign by one of the following methods:

  • Any procedure outlined in the trust instrument.
  • Obtaining the consent of the person who can revoke the trust (if the trust is revocable).
  • Obtaining the consent of all adult beneficiaries (if the trust is not revocable).
  • Obtaining a court order. 

Most trust instruments will include provisions detailing the process for how a trustee may resign. A common requirement is for the trustee to give written notice of the resignation to either the trust beneficiaries and/or any co-trustee or successor trustees specified in the instrument. If the trust instrument has a resignation provision, the trustee must follow whatever process is detailed in the instrument if the resignation provision is stated as the exclusive means.

However, suppose the trust document does not contain a resignation provision. In that case, the trustee may resign either by obtaining consent from the appropriate parties or by filing a petition to resign with the probate court. California Probate Code §17200 allows a trustee to petition the court to accept their resignation as trustee. The court must accept the trustee’s resignation and has the discretion to make any orders necessary to preserve the trust property, including the appointment of a receiver or a temporary trustee.

Can a trustee be forced to resign?

No, a trustee generally cannot be forced to resign. However, a trustee can be non-consensually removed through court processes in some situations. Sometimes, when trustees are facing removal, they will resign voluntarily to avoid the potential costs and consequences of going to trial.  

Can a trustee be legally removed?

Yes, a trustee can be legally removed. 

Under California Probate Code §15642, a trustee may be removed according to the terms of the trust instrument, by the court on its own motion, or on the petition of a settlor, co-trustee, or beneficiary. The probate court can order that a trustee be removed for “good cause.” 

Some of the most common reasons that a trustee can be removed by the court include:

  • When the trustee commits a breach of trust.
  • When the trustee becomes insolvent or otherwise unfit to administer the trust.
  • When the trustee fails or declines to act.
  • When the trustee’s excessively compensated under the circumstances.
  • When the trustee is substantially unable to properly execute their duties.

The trust instrument may identify additional grounds for removal according to the process outlined in the document. Some trust documents will also allow the beneficiaries or a third party to remove and replace the trustee at their discretion. 

When should I contact a trust litigation lawyer?

As a trustee, you should contact a trust litigation lawyer if you wish to resign or if you start to suspect that a beneficiary or co-trustee intends to file a petition for your removal as trustee. Depending on your situation, a knowledgeable trust attorney can help you understand the requirements for tendering your resignation or defend against your removal. We also recommend that new trustees consult with a trust lawyer upon appointment, particularly if it is their first time serving in the role.

 

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About RMO, LLP

RMO LLP serves clients in Los Angeles, Santa Monica, Ventura, Santa Barbara, San Francisco, Orange County, San Diego, Kansas City, Miami, and communities throughout California, Florida, Missouri, and Kansas. Our founder, Scott E. Rahn, has been named “Top 100 – Trust and Estate Litigation” by SuperLawyers, Trusts and Estates Litigator of the Year, and Best Lawyers in America for Litigation – Trusts and Estates. For a free consultation, call (424) 320-9444 or visit: https://rmolawyers.com.