Administering a trust is a considerable responsibility. It can also be incredibly complex, especially in cases involving sophisticated assets, inadequate planning or thorny relationships with beneficiaries.
In some situations, the trustee attempting to administer a trust fails (or appears to fail) to fulfill his or her obligations properly. This can make an already difficult process even more complicated, and parties may wish to remove the trustee. However, it is important to proceed cautiously under these circumstances.
The case for removing a trustee
Removing a trustee can be an option in situations where there are grounds to do so. As directed in California laws, these grounds include:
- A breach of trust by the trustee
- Being unfit to fulfill the duties of a trustee
- Failure or refusal to act
- Inability of co-trustees to cooperate and administer the trust effectively
- Wrongful designation of the trustee
- Inability of trustee to resist undue influence or fraud
- Self-dealing
For these and other reasons, a trustee can be removed. The courts, the settlor, a beneficiary or a co-trustee may seek removal. The trustee can also remove himself or herself voluntarily.
Removing a trustee can alleviate problems that may be complicating the administration process and put a stop to mismanagement of assets.
Drawbacks to consider
It is important to take this process and allegations of mismanagement seriously. Simply disagreeing with a trustee who is not acting improperly typically will not result in removal. Filing a motion or challenging the trustee may only draw the process out and cause avoidable conflict.
Understand that removing a trustee can mean starting the administration process over. And it will be crucial to have documentation and other evidence of any suspected wrongdoing. Further, parties should consider the cost associated with the process and who will pay for it. The money may end up coming out of the trust.
That being said, removing a trustee may be necessary to protect the trust or the settlor’s wishes.
Making the right decision
Whether removal efforts are appropriate or not depends on the details of an individual case. There are benefits and drawbacks with both options; talking to an attorney about a specific situation can help parties make an informed decision.
