Can a Trustee Be Removed From a Trust
Trusts are one of the most important and versatile tools in estate planning. Not only do trusts allow one to pass on their property and financial accounts while avoiding probate, however, trusts also protect assets, reduce taxes on the assets, and can delay the distribution of assets to beneficiaries if desired. Though trusts offer many benefits, trustees—the person appointed to look after and distribute the assets within a trust—can run into many problems when administering the trust. Depending on the severity of the problems a trustee runs into, the trustor, co-trustees, or beneficiaries may look to remove a problematic trustee.
What is a Trustee
A trustee is responsible for the disposition of assets in a trust. This includes overseeing the day-to-day management of property and assets within a trust. As the trustor, you can choose anyone to act as your trustee. This includes any person, institution, or a combination of both. In most cases, a trustee serves after your death and has several major responsibilities. These responsibilities include: administering your estate and distributing the assets to your beneficiaries, making certain tax decisions, paying an estate’s debts or expenses, ensuring all life insurance and retirement plan benefits are received, and filing the necessary tax returns, and paying the appropriate federal and state taxes.
Power to Remove a Trustee
In most cases, the documents that create a trust will discuss who has the power to remove a trustee. If created by a diligent attorney, the documents will also outline the process associated with removing a trustee. However, even if the trust document does not discuss entities that can remove a trustee or how to move forward with the process, certain individuals may be able to remove the trustee through other means.
The following individuals often have the power to remove the trustee:
- Trust beneficiaries
- The probate court
- The grantor of the trust
Additionally, a trustee can voluntarily decide to leave their role.
Grounds for Removal
Trustees are bound to follow both state laws and the terms of the trust document. Further, they must perform certain general tasks such as managing trust assets carefully and act in a loyal way to the beneficiaries and trust itself. When a trustee does not perform their actions or performs them incorrectly, they can be removed from their position. Below are a few common reasons why a trustee may be removed from a trust.
- Self-dealing or stealing trust property
- Violations of the terms of the trust
- Hostility between the trustee and beneficiaries
- Mismanagement of trust assets, either intentionally or negligently
- Charging excessive fees
- Incapacity or insolvency
- Failure to make accounting or report as required or requested by the beneficiaries
If you have the power to remove a trustee, you should first reach out to them to discuss the issues you have and give them a chance to comply with the terms of the trust before removing them from the trust. However, if nothing changes after this conversation, it may be a good idea to remove the trustee.
Steps to Remove a Trustee
In most cases, if you are looking to remove a trustee from a trust, you should look at the trust documents to determine how to move through this process. However, if the trust documents do not discuss how to remove a trustee, you need to petition the probate court to remove the trustee.
Additionally, one can also sue the trustee for any damages they caused the estate by mismanaging the trust. For example, if a trustee spent trust assets on unnecessary purchases, the beneficiaries of the trust will likely be able to recover this money.
Removal by the Grantor of The Trust
In most cases, a trustor is able to remove a trustee and a successor trustee. Further, the trustor can remove a trustee at any time without giving the trustee a reason for removal. A trustor is able to execute this move by simply amending the trust documents.
Removal by Co-Trustee
A serious conflict between trustees could lead one member to try and remove the other. If the trustor is still living, the trustees should consult them—so they can amend the trust documents—before seeking court assistance. However, if the trustor is dead, the trustees should seek approval to remove the other trustee from the beneficiaries of the trust. Further, if there are no specifically named beneficiaries, it will be difficult for one trustee to remove another trustee without petitioning the probate court for removal.
Removal by Beneficiaries
Most trust documents include a provision that allows a beneficiary to a trust to remove or replace a trustee. If there are multiple beneficiaries to a trust, a majority vote from beneficiaries is often necessary. However, beneficiaries will typically only be able to remove a trustee if they have acted in some way necessitating their removal. If there is not cause, the beneficiaries can file a petition with the probate court for removal.
Petitioning the Probate Court for Removal
A co-trustee or beneficiary can petition the probate court for the removal of a trustee. While an already difficult process, it can become even more complex if one of the beneficiaries of the trust is also a trustee. Further, the petition may also seek financial damages from the trustee.
To create a good case, the plaintiff must present clear evidence showing the court that the trustee violated the terms of the trust agreement or their fiduciary duty. If the probate court receives enough information showing that the trustee may need to be removed, to court will conducting depositions, issuing subpoenas for records, and receiving accounting records from the trustee. This process may also require the use of accountants, other financial experts, and attorneys. Finally, it is important to note that the trustee may use trust assets to defend against removal.
Trust and estate laws are complex. This is so no matter the type of trust you decide to establish. As such, it is extremely important to have legal representation that can help you correctly set up your trust. The Antonoplos & Associates trust and estate lawyers have over 20 years of experience helping clients in DC, Maryland, and Virginia set up a variety of trusts. With this knowledge and experience, we can help with any legal issues that occur from setting up your trust.
Furthermore, Peter Antonoplos, founder and managing partner of Antonoplos & Associates has an LLM in Taxation from Georgetown University Law Center. With this knowledge, Peter can help you decide what is the best type of trust for you and your family. Additionally, he can maximize the cost savings you receive from setting up a trust in DC, Maryland, and Virginia.
Contact our DC Law Office for More Information
Finally, for more information regarding can a trustee be removed from a trust, contact us at 202-803-5676. You can also directly schedule a consultation with one of our skilled attorneys. Additionally, for general information regarding trust and estate law, check out our blog.