If you have questions about how the trustee of your family trust is acting, you may want to consider having them removed. However, removing a trustee can be a costly and challenging process.
Once appointed, trustees have numerous rights and responsibilities. However, they typically do not have the right to quit being a trustee without approval. A trustee who fights against their removal can lead to a long, drawn-out court battle that sucks money directly from the trust.
Therefore, the provisions for removing a trustee often hinge on the terms of the trust. Outside of the conditions set forth within the trust instrument, it typically requires a court order to have a trustee removed.
Who Has the Power to Remove a Trustee?
Only specific individuals have the standing to remove a trustee. If a trust is revocable, the person who created it typically has the discretion to remove their appointed trustee. This person, known as the grantor, can undo their appointment or even revoke the trust itself.
Revocable living trusts are common estate planning instruments. Often, the grantor will name themself as the trustee while they are alive and have the capacity to manage the trust’s property. However, once the grantor passes away, the trust will become irrevocable.
For irrevocable trusts, the grantor cannot be a trustee nor end the trust’s existence. In these cases, the circumstances for removing the trustee are more limited than for revocable trusts. Beneficiaries are commonly given the ability to remove a trustee within the terms of the trust. In these cases, the trust often allows the beneficiaries to remove a trustee with a majority or supermajority vote.
However, if the trust does not contain a provision for voting to remove a trustee, beneficiaries often have to resort to legal action.
Unless you are a grantor, beneficiary (or their guardian, for minor beneficiaries), or co-trustee of the trust, you typically will not be considered an interested party. This means you won’t be able to have a trustee removed.
Under What Circumstances Can a Trustee Be Removed?
There are two typical situations where you might seek to have a trustee removed. The first is the death or incapacity of the trustee, and this is typically a straightforward process. However, if you want to remove a trustee because you believe they have broken their duties to the beneficiaries, you may need to fight in court.
Trustee Dies or is Incapacitated
If the trustee has died or suffered a debilitating injury or disease, beneficiaries can often vote to remove the trustee or petition probate court to have them removed.
Unless the trustee disputes that they are incapacitated, this process is generally simple. However, if the trust instrument does not contemplate naming another trustee, procedures for appointing a new trustee can be complicated. Beneficiaries may have the right to choose their own trustee, especially if they can agree on a nominee. But otherwise, a probate court will often appoint a professional trustee to handle ongoing distributions.
Trustee Violates Duty Towards Trust
There are a variety of grounds that could lead to the beneficiaries having a trustee removed. These include:
- Mismanaging trust property
- Charging illegal or excessive fees
- Having conflicts of interest with trust assets or a beneficiary
- Committing fraud
- Ignoring the terms of the trust
- Being unresponsive or uncooperative with the beneficiaries
Of course, it is unlikely the trustee themselves will agree they breached any of their duties. State law governs what an inappropriate conflict of interest or an excessive fee structure is.
One or more beneficiaries will need to petition the probate court to remove the trustee on any of the above grounds. It is usually easier to have a trustee removed if there is other evidence of wrongdoing, such as a criminal conviction, sanction, or bankruptcy.
How Long Does It Take to Remove a Trustee?
Removing a trustee for a breach of their duties can be a long and expensive process. The trustee has the right to hire their own representation and may even be able to use trust property to defend themselves against a removal petition.
Therefore, beneficiaries are often spending double to have a trustee removed. You will need to hire your own attorney to represent yourself and prove why the trustee needs to be removed. You and your other beneficiaries will need to pay court costs and attorney’s fees out of your own pocket while the trustee spends money that will eventually be yours.
Some places allow beneficiaries to recover the expenses a trustee spends defending themselves from the trustee directly. Usually, you and your attorney need to prove the trustee clearly breached their duties. Unreasonable spending on attorneys from trust property can also theoretically be recovered.
The pace of litigation is difficult to estimate, but it can take years of appeals until a trustee is formally removed. However, the trustee must still uphold their duties during this time, even though they are being sued.
Before starting any petition to remove a trustee, it is best to consult with an experienced probate litigation attorney.
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Can Trustees Be Held Personally Liable?
The Trustee’s Guide to Trust Distributions
The Trustee’s Guide to Avoiding Trustee Removal
The Guide to Breach of Fiduciary Duty and Abuse
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.