Family trusts are designed to help you protect yourself and your loved ones financially. Your assets are transferred to the trust and a trustee is responsible for managing your finances according to your wishes. The trustee's job is to protect your financial interests during your lifetime and beyond in accordance with state law. In cases where the trustee isn't doing her job properly, it may be necessary to have her removed.
Power of Removal
A family trust deed should specify who can remove a trustee and under what circumstances. Typically, the power to remove a trustee rests with the person who created the trust, also known as the settlor; the trust beneficiaries; and any co-trustees the settlor has named. If you're the settlor, you have the option of omitting the removal power altogether or assigning it to an outside party, such as an attorney. The trustee can also voluntarily request to be removed if he is not able to fulfill his duties. In certain situations, the probate court also has the authority to remove a trustee.
Grounds for Removal
Trustees are required to follow state law and your specific instructions regarding the trust. Trustees are expected to be loyal, impartial and careful in managing trust assets. They are supposed to invest trust assets wisely and avoid seeking to further their own interests. If a trustee commits a serious breach of trust, mishandles your assets or otherwise violates state law, these are all grounds for removal. Depending on where you live, the probate court could also choose to remove a trustee for insolvency, failure to act, receiving excessive compensation, general unfitness to serve or a refusal to cooperate with co-trustees.
Request to Comply
If you believe the trustee isn't doing her job according to your wishes, you can petition the probate court to force her to comply. The court will review the terms of the trust and any evidence you present to determine if the trustee is doing her job. If the court finds that the trustee isn't carrying out her duties, it will issue an order that specifies what she needs to do to be in compliance. Typically, trustees only have a set amount of time to adhere to the order. If the trustee doesn't do what's required, the court can then take additional steps to have her removed.
If you think a trustee has committed a crime such as fraud or embezzlement, you'll need to act quickly if you want to pursue civil or criminal charges. Every state has a statute of limitations that specifies how long you have to take legal action. In some states, you could be barred altogether from filing a claim if you knew the trust was being mismanaged but didn't take action in a timely manner. If you're planning on getting help from an attorney, you'll need to make sure you have accurate and detailed records to support your reasons for removal.
- Hemera Technologies/Photos.com/Getty Images
- What Are Examples of Luxury Goods?
- What Are Budget Considerations?
- What Type Person Is Condo Living Right For?
- How to Third-Party a Check
- Why Do You Need Personal References for a Master Promissory Note?
- Does the Number of Dependents Affect a FAFSA?
- How to Create Personal Budgets
- Examples of Short-Term Personal Financial Goals
- How to Remove a Trustee From a Family Trust
- How to Rent an Apartment with Another Person