When a beneficiary is unhappy with the administration of a trust, they often wonder whether it’s possible to remove a trustee. The short answer is yes, you can remove a trustee, but only under certain circumstances. To determine whether removal will be possible in your situation, the first place to look is to the trust itself. Many trust documents will set out who is able to initiate a removal and for what cause. If there is no removal clause in the trust, or if the removal clause doesn’t apply to your situation, the only other means of removal is by an order from the probate court.
Most states have adopted some form of the Uniform Trust Code, which spells out the circumstances under which a probate court will order the removal of a trustee. The removal proceedings may be initiated by the settlor of the trust, a cotrustee, a beneficiary or by the court itself.
TL;DR (Too Long; Didn't Read)
There are several circumstances that allow for a trustee to be removed and replaced.
Serious Breach of Trust
A court will remove a trustee if it finds they have committed a serious breach of trust. A “serious” breach might be one act that significantly harms a beneficiary or many small acts that together cause serious harm. Examples of a serious breach could be if the trustee is mishandling funds, refuses to fulfill a beneficiary’s request for information about the administration of the trust or if the trustee is found to be using the trust to benefit himself or anyone other than the beneficiaries.
Lack of Cooperation Among Co-Trustees
In cases where there's more than one trustee, there might be an instance where a bad relationship among the trustees is affecting their ability to fulfill their duties. If the court finds that this lack of cooperation is substantially impairing their ability to administer the trust, it may rule to remove one or more of the trustees.
Failure to Administer Effectively
There are cases where a trustee is unable or unwilling to administer a trust because of illness or lack of skill. In these cases, if it is in the interest of the beneficiaries, the court will relieve the trustee of their duties. The court might also remove a trustee who has consistently failed in administering the trust effectively. Ineffective performance might mean the trustee has a long history of poor performance or routinely makes poor investment decisions.
Serving the Interests of All Beneficiaries
Finally, a court might order the removal of a trustee if all the beneficiaries request it, the removal is in the best interest of the beneficiaries and if the removal would not go against the original intent of the settlor. The court may not approve the removal of a trustee if the trust specifically gives a reason or objective for their appointment.
Sally Brooks is a writer living in Atlanta with her chunky toddler and patient husband. She writes about personal finance for websites and blogs, including Hitched Magazine and Ottawa Family Living.