The Trustee’s Guide to Avoiding Trustee Removal

As a trustee, you can be legally removed if you fail to comply with your duties to the beneficiaries or otherwise mismanage the trust. While some trust instruments may outline a procedure for removing a trustee, beneficiaries can also petition the probate court to do so.

Can a trustee be legally removed?

Yes, a trustee can be legally removed. 

California Probate Code §15642 allows a trustee to be removed in accordance with the trust instrument, by the court on its own motion, or on petition of a settlor, co-trustee, or beneficiary.

Why would a trustee be legally removed?

California Probate Code §15642 lists the grounds for removal of a trustee by the court. The trust instrument may identify additional grounds for removal according to the process outlined in the document.

One of the most common grounds for removing a trustee is when the trustee has committed a breach of trust. California Probate Code §16400 defines a breach of trust as the violation by a trustee of any duty that the trustee owes the beneficiaries of the trust.

A simplified list of the duties the trustee owes the beneficiaries of the trust includes:

  • The duty to administer the trust according to the terms of the trust instrument.
  • The duty to act in the best interest of the trust and its beneficiaries.
  • The duty to treat all beneficiaries fairly and impartially.
  • The duty to avoid using the trust for the trustee’s own benefit.
  • The duty to keep trust property separate from other property.
  • The duty to take reasonable steps to enforce claims that are part of the trust property.
  • The duty to take reasonable steps to defend actions that may cause a loss to the trust.

If the trustee violates any of these duties, they likely may have committed a breach of trust that can serve as grounds for removal. 

Other common grounds for removal of a trustee by the court include:

  • The trustee is insolvent or otherwise unfit to administer the trust.
  • Hostility or lack of cooperation among co-trustees impairs the administration of the trust.
  • The trustee fails to act.
  • The trustee’s compensation is excessive under the circumstances.
  • The trustee is substantially unable to manage the trust’s financial resources or is otherwise substantially unable to execute properly the duties of the office.
  • The trustee is substantially unable to resist fraud or undue influence. 
  • Other good cause.

How is a trustee removed?

Under California Probate Code §17200, a trustee or beneficiary of a trust may petition the probate court concerning the internal affairs of the trust, which includes the removal of a trustee. 

A beneficiary or co-trustee can submit a petition to remove a trustee to the court. After the petition is filed, a hearing will be scheduled, and a judge will hear the arguments for or against removal and either make a decision or continue the proceedings to allow the parties to gather and present further evidence. If the judge determines that the trustee should be removed, a replacement trustee will be appointed. In some circumstances, the judge can also order the trustee to pay money damages,  attorney’s fees, and court costs.

In some situations, the parties can negotiate a settlement agreement before the removal hearing. If valid grounds for removal exist, the trustee might choose to voluntarily resign to avoid the personal liability they could face if the case goes to trial.

How do I protect myself from being removed?

To protect yourself from being removed as a trustee, it’s essential that you comply with your legal duties and obligations. A violation of any of the duties you owe the trust beneficiaries can be considered a removable breach of trust. You must ensure that you manage the trust prudently and for the sole benefit of the trust and its beneficiaries.

It’s also vitally important that you thoroughly read and understand the trust instrument and follow its instructions to a T. It’s always a good idea for trustees to retain a knowledgeable trust attorney when they are appointed. An experienced lawyer can help you understand your legal duties and the terms of the trust, which can protect you from removal and potentially money damages based on unintentional errors down the road . 

When should I contact a trust litigation attorney?

You should contact a trust litigation attorney the moment you’ve been accused of any wrongdoing or learn that a petition for removal may be filed against you.

 

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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.