Guide for Removing a Trustee From a Trust
Can you remove a trustee from a trust? Can a trustee be removed without consent? How much does it cost to remove a trustee? How long does it take to remove a trustee? What are the grounds for removing a trustee? What should be included in a trustee removal petition?
Learn the answers to these questions and more from Keystone’s guide on removing a trustee from a trust.
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Whether it’s because they are carrying out trust-related activities in secret or are failing to look out for beneficiaries’ best interests, trustees cannot always be trusted. If the trustee of a trust from which you stand to inherit shows signs of being untrustworthy, you may be wondering what your options are for safeguarding your inheritance.
One of the most effective remedies for beneficiaries who are dealing with a successor trustee who either has or is likely to cause harm to a trust is removal of the trustee.
You’re probably wondering: Can a trustee be removed without consent? The answer is a resounding yes. The ability to seek removal and replacement of a trustee is one of your most important rights as a trust beneficiary. And it may be the only option you have for ensuring you receive your rightful inheritance from a deceased loved one’s trust.
Sometimes, trustee misconduct can be resolved by the beneficiaries simply raising their concerns with the trustee; other times, more drastic measures are needed. To learn the best approach for your given situation, consulting with a probate attorney is crucial.
We understand it can be difficult to broach the idea of filing a trustee removal petition, especially if the trustee is a family member (as they frequently are). But if you don’t take swift action to remove a bad trustee, you not only would be doing yourself and the other beneficiaries a disservice, but you also would be doing a disservice to your deceased loved one, who had appointed the trustee in question because they were counting on them to get their hard-earned assets to the right people.
In this guide for removing a trustee of a trust, you will learn:
● Who can remove a trustee from a trust?
● What are the grounds for removing a trustee?
● How to petition the court to remove a trustee
● How much does it cost to remove a trustee?
● How long does it take to remove a trustee?
● and much more …
Let’s first dive into who the successor trustee is and why they were appointed in the first place.
Who Is the Successor Trustee?
As you might guess, the successor trustee is the person appointed by the trust creator (known as the settlor, grantor, or trustor) to succeed the original trustee (who is usually the settlor) as trustee when they either are unwilling to act as trustee or are unable to act as trustee due to their incapacitation or death.
Unlike executors and administrators of the estate, successor trustees generally can begin their administrative duties without being formally appointed by the probate court. They also are not subject to court supervision in the way executors and administrators are during the probate process. The commonalities between executors/administrators and trustees are their fiduciary duties to beneficiaries, which we go over in the next section.
Most trusts are revocable living trusts — which means they can be revoked or amended by the settlor (as long as they’re mentally competent) during their lifetime. Once the settlor becomes incompetent or dies, revocable trusts with no surviving settlors typically become irrevocable — which means they cannot be revoked or changed by the successor trustee or beneficiaries unless one of the valid conditions for changing a trust are met.
Since both revocable and irrevocable trusts are set in stone once the successor trustee takes over control, the trustee is required to administer the trust exactly as described by the trust instrument.
What Are a Trustee’s Fiduciary Duties?
Trustees are fiduciaries, which means they have a duty to act for the benefit of trust beneficiaries. It also means they are obligated to always prioritize the beneficiaries’ best interests over their own when carrying out trust-related activities.
Some of a trustee’s most notable fiduciary duties include:
- Duty of Loyalty: Always making decisions that align with the beneficiaries’ best interests, not their personal interests or those of third parties
- Duty of Impartiality: Treating all beneficiaries equally
- Duty to Avoid Conflicts of Interest: Steering clear of situations where their personal interests directly or indirectly conflict with the interests of the beneficiaries
- Duty to Avoid Commingling: Keeping trust assets separate from other assets
- Duty to Account: Preparing formal and informal accountings (as required) to provide beneficiaries
- Duty to Inform: Sharing reasonable amounts of information with beneficiaries
For a full list of the trustee’s fiduciary duties, visit California Probate Code sections 16000 – 16015.
What Constitutes a Breach of Fiduciary Duty?
Put simply, a breach of fiduciary duty has occurred if the person responsible for acting in your best interests fails to do so. In the context of trusts, it means that the trustee has acted in a way that is contrary to the terms of the trust or adversely affects the beneficiaries’ interests.
Perhaps the trustee is making risky investments using trust funds. Perhaps the trustee has sold one of the trust’s real properties for below fair market value. Perhaps the trustee has misappropriated trust assets. Depending on the specifics of the situation, any of these examples could constitute a breach of fiduciary duty by the trustee.
Many beneficiaries are curious about the legality of a trustee withdrawing money from a trust. Trustees usually require unrestricted access to trust assets to satisfy their trustee responsibilities, which include, among other things, paying debts and administration expenses, preparing trust accountings and making timely trust fund distributions to beneficiaries. But trustees having unrestricted access to trust assets can also backfire, because if they cause harm to the trust, they could be removed or worse.
The severity of the consequences for a breach of fiduciary duty generally depend on how much the trustee’s actions harmed the trust. If the harm caused was significant, the trustee likely will face not only removal but a potential surcharge (which can be steep) as well. If the harm caused was not too serious, the trustee may be able to directly resolve the matter with beneficiaries.
In many cases, trusts may contain millions of dollars’ worth of assets (if not more), so it should come as no surprise that even the most honest of trustees can get tempted to misuse or misappropriate assets. But any improper utilization of trust assets (no matter how minor or temporary) can ultimately result in removal and replacement of the trustee.
If you believe the trustee of a trust has breached their duties, keep reading to learn about what you can do as the beneficiary to enforce your rights and protect your inheritance.
Can a Trustee Be Removed Without Consent?
If a trustee has violated their fiduciary duties or poses a threat to the trust in some other way, it may be possible to suspend or remove them without their consent, but their alleged violations will need to be laid out in a trustee removal petition, which you file with the court.
Trustee removal petitions are not summaries; they are detailed accounts of the trustee’s violations. For example, if you are alleging that the trustee stole from the trust, you ultimately will need to prove how much they stole with admissible evidence, as well as the likely timeframe of their theft.
This type of detailed information can be difficult to come by as a beneficiary, particularly if the trustee is taking special care to hide their misdeeds from you. But if you have a lawyer on your team, they can handle the heavy lifting by investigating the matter and penning the trustee removal petition on your behalf.
While beneficiaries are the most common petitioners for removal of trustee, there are others who are entitled to petition for removal of the trustee as well. Learn whether you have standing in the next section.
Can a Trust Instrument Remove a Trustee?
A trustee can be removed for the reasons mentioned in the terms of the trust instrument.
For example, the terms of the trust instrument may permit a trustee to be removed for lack of capacity if two licensed medical professionals attest to the trustee’s incompetence in writing.
Another example is if the terms of the trust permit the beneficiaries to remove a trustee with a majority vote.
In both of these examples, the trust itself provides a means and a basis for removing the trustee that can be effectuated without filing a petition in the probate court.
Can the Court Remove the Trustee on Its Own Motion?
While the court will occasionally remove a trustee on its own motion, it is rare. The more likely scenario is a trust beneficiary filing a petition for trustee removal.
With that said, the court can remove a trustee on its own motion (i.e., without anyone filing a trustee removal petition) if the trustee has harmed the trust, or if it seems (based on the trustee’s prior actions and behavior) that the trustee could harm the trust down the road.
But there can also be other reasons for a court removing the trustee. For instance, if the trustee is convicted of a crime and will have to serve time in prison as a result, the court likely will remove the trustee to keep trust administration moving along.
Can a Settlor Remove a Trustee?
The trustee is in control of the settlor’s assets, so if the settlor is alive and doesn’t like how their assets are being managed, they have a right to remove the trustee, so long as their trust is not irrevocable.
There is a caveat, however. A settlor who has become incapacitated generally cannot remove a trustee, as making such a sweeping decision requires one to be mentally competent enough to understand its full repercussions.
If the settlor has already died, then the only persons who have standing to seek removal of the trustee are any co-trustees (given there are co-trustees) and beneficiaries.
Can a Co-Trustee Remove a Trustee?
Co-trustees have the power to petition the court for the removal of a co-trustee, but they will need to provide a detailed description of their reasons for making such a request.
Most often, co-trustees seek removal of a fellow trustee because of disagreements they are having with them that are delaying trust administration to the detriment of beneficiaries. Another common reason is a co-trustee not carrying their weight.
A trend for settlors who are parents of multiple children is to name all their children as co-trustees. In doing this, the intent of parents is generally to treat all their children equally; however, if the provisions of the trust call for all the co-trustees to sign off on a decision before it can be made, things can get complicated.
Can a Beneficiary Remove a Trustee?
A beneficiary’s power to remove and replace a trustee is one of their most important rights. In fact, beneficiary petitions are the most common way trustees are removed.
Trusts are created for the benefit of beneficiaries, so it makes sense that beneficiaries would want to protect trust assets from a trustee who has demonstrated untrustworthy behavior.
When trustees violate their fiduciary duties, it directly affects beneficiaries. No offense by the trustee should be taken lightly, as even a minor offense could pave the way for more significant offenses to be committed later. If beneficiaries suspect a trustee to be engaged in fiduciary misconduct of any kind, they should immediately hire a probate attorney to investigate the matter.
What Are the Grounds for Removing a Trustee?
To uphold the final intentions of the settlor, a successor trustees only can be removed for certain reasons. The trustee’s actions must meet one of the grounds listed in California Probate Code section 15642 (b) for removal of a trustee.
In the following subsections, we discuss the most common grounds for removing a trustee from a trust.
Trustee Committed a Breach of Trust
A trustee commits a breach of trust by being in violation of any of their fiduciary duties. To put it another way, if the trustee made decisions that were not in line with the beneficiaries’ best interests, they committed a breach of trust for which they potentially could be removed.
Suppose that a trustee is a founder of a startup business that has not yet taken off financially. If they use trust assets to invest in their business, it not only is a conflict of interest, but it is grounds for trustee removal. Trustees generally are allowed to make investments with trust funds, but the investments must be sound, and they should not personally benefit from these investments.
A breach of trust can also entail a trustee not cooperating with beneficiaries. For example, if the trustee has failed to provide beneficiaries with a copy of the trust instrument, trust accountings or even just general information about the trust, it is considered a breach of trust, and they could be removed for it.
Trustee Is Unfit to Manage Trust
Trustees can be removed from their role if they have demonstrated an inability to ethically or diligently manage the trust.
For example, if a trust contains complex assets (e.g., business entities or a substantial real estate portfolio), and the nominated trustee does not have the necessary skillset to manage these assets and acts grossly negligent, the beneficiaries would be fully within their rights to attempt to have the trustee removed.
A trustee also could be unfit to manage a trust if they lack capacity or fail to meet the age requirements of the role. To be trustee, you must be 18 years of age or older.
Co-Trustees Are Unable to Cooperate With One Another
Not all trusts will have co-trustees, but when they do, trust administration has the potential to be more challenging. This is because the trust instrument may require for decisions related to the trust to be signed off on by all the co-trustees. If there are co-trustees who disagree with a decision, they may withhold their approval, delaying administration indefinitely.
While co-trustees can do their best to compromise with one another, it may be impossible for them to reach an agreement. If this is the case, a beneficiary or co-trustee can file a petition to remove one or more of the co-trustees on account of trust administration having been paralyzed because of their inability to cooperate.
Trustee Fails or Refuses to Act
Just because a trustee is named in a decedent’s trust, it does not mean that they must serve. A trustee nominee always has the right to refuse their appointment.
While it would be ideal for them to notify interested parties of their unwillingness to serve, they are only required to do so if they already accepted their appointment and are subsequently stepping down.
If a trustee fails or refuses to act but does not formally resign from their role (the procedure for which is outlined in California Probate Code section 15640), they can be removed in an effort to get administration off the ground.
Trustee Compensation Is Excessive
Trustees usually are entitled to collect trustee fees; however, their fees should not only be reasonable but they should be proportional to the amount of work they’ve put in. Trustee fees also can vary based on whether the trustee is a professional or non-professional. Professionals are generally entitled to charge more.
When trustees charge fees that are excessive, beneficiaries can and should take action — because those fees potentially could reduce their inheritances. While it’s sometimes possible to raise your concerns about compensation with the trustee directly, filing a petition for removal of a trustee may be your only option if they are unwilling to budge.
Trustee Is Unable to Resist Fraud & Undue Influence
Fraud is an intentional act of deception, whereas undue influence occurs when a vulnerable person is pressured into acting against their own free will.
If a trustee is susceptible to fraud and undue influence, they should not be managing their own financial assets, let alone those of a trust. Trusts can contain millions of dollars’ worth of assets, so trustees who are financially savvy and sharp are needed to manage them.
When trustees start to lose capacity due to old age or dementia, they should promptly be removed as trustee to avoid their falling victim to fraud and undue influence.
Trustee Is a “Disqualified Person”
If the trustee is not related to the decedent, but shared a professional relationship with the decedent that gave them access to the decedent and their trust instrument, then it is presumed that they used fraud or undue influence to be named as the trustee, regardless of whether they are receiving a gift from the trust.
Examples of “disqualified persons” include:
- The drafter of the trust instrument
- The care custodian of the settlor
- The transcriber of the trust instrument or the person who caused it to be transcribed
- Any person related by blood, affinity, cohabitation or employment to one of the categories of persons mentioned above
For example, if a decedent’s trust names their caregiver as the trustee, it should raise red flags. Maybe the caregiver worked in the decedent’s home on a regular basis and fed the decedent lies about their family not caring about them or about how they were the only person in the decedent’s life that could be trusted. As a result of these mistruths, the decedent believed their caregiver would be the best person to manage their trust. In reality, the caregiver may not have had the best of intentions.
When a disqualified person is the successor trustee, it is crucial to discuss the matter with a trust attorney, who can file a petition to remove them if necessary. Keep in mind that settlors can legally appoint disqualified persons if that is what they want, but there are some extra steps they will need to take to show the court that no unsavory means were used by the disqualified person to be named trustee.
How to Petition the Court to Remove a Trustee
Wondering how to remove a trustee from a revocable trust? Wondering how to remove a trustee from an irrevocable trust? The good news is that the process for removing a trustee from a revocable trust after the death of the settlor usually is similar, if not identical, to the process of removing a trustee from an irrevocable trust after the death of the settlor.
Before getting started with your removal of trustee form, it is important to ask yourself and possibly even discuss with the other beneficiaries or co-trustees why you are seeking trustee removal. Is it because you do not get along with the trustee? Is it because you believe you should be trustee? Is it because the trustee has disregarded their fiduciary duties?
As we already discussed, trustees can only be removed on certain grounds. If you believe you have valid grounds for trustee removal, keep reading to learn valuable tips for how to remove a trustee from a trust.
Valuable Tips for Removing a Trustee From a Trust
To be successful in your action to remove a trustee, you should not leave any stone unturned. You will need to prove to the court that by the trustee remaining in their role, they will cause irreversible harm to the trust.
In any legal matter, when you are looking to prove something, documentation is key.
Document Significant Interactions With the Trustee
Whether or not you are dealing with an unethical trustee, it is a good idea to keep track of any correspondence you have with them.
For example, if you verbally or through email requested trust information from the trustee, you will want to jot down the date of the request, the nature of the request and the trustee’s response. This way, if you do wish to file a trustee removal petition down the road, you will have a log of interactions to present to your lawyer.
When possible, written communication is ideal. This way, the court will not be going by your word, but will have actual documents to review.
Get the Other Beneficiaries & Co-Trustees on the Same Page
When bringing a claim against a trustee for removal, it is always a good idea to try to get the other beneficiaries or co-trustees (when applicable) on the same page as you. This way, you not only can share litigation costs but appear as a united front to the court.
When all parties agree that removing a trustee from a trust is the right move, it will be more difficult for the court to deny the relief sought. Conversely, if only one beneficiary is seeking trustee removal, they may have to work harder to prove their point, as the court will want to make sure they are not seeking removal because of a personal conflict they are having with the trustee.
Hire a Probate Attorney Early in the Process
It is important to consult with a lawyer as soon as you realize that the trustee may be breaching their duties or causing harm to the trust in some other way. If beneficiaries wait too long to take action, the trustee may irreversibly damage the trust, which could result in reduced inheritances.
When a trustee is actively damaging a trust, a lawyer can file a petition to suspend them until a thorough investigation can be carried out. Sometimes, a lawyer’s involvement is enough to get an unethical trustee to voluntarily resign.
It should come as no surprise that trustee removal litigation can be expensive, but depending on the specifics of your case, your lawyer may have a few tricks up their sleeve that could save you money and time. For example, they could help you reach an agreement with the trustee outside of court through mediation in which the trustee agrees to step down in exchange for a small settlement sum.
Draft and File a Detailed Trustee Removal Petition
Filing a petition for removal of trustee in California is much easier to do with help from a lawyer than on your own. A lawyer can not only draft the trustee removal forms for you, but file them with the court as well.
In the trustee removal forms, you or your lawyer will need to clearly lay out all your reasons for seeking trustee removal. This is where your log of trustee correspondence and any accountings they have provided will prove useful. It’s best to include as much detail as you can in these forms. Copies of any documents mentioned in the petition (e.g., receipts, bank statements, trust deeds) also can be filed with the petition for the court to review.
Once your petition is filed, the court will set a hearing date.
Attend the Hearing
It is important for all interested parties, even if they were not the ones to file the trustee removal petition, to attend the hearing. This is so they can have a say in the proceedings (e.g., if a replacement trustee needs to be selected).
The petitioner(s) should attend as well, but with a lawyer on their team to present their arguments for removing the trustee to the judge.
There are many potential outcomes to a trustee removal case. It is possible the judge will remove the trustee as requested, or the judge may choose to suspend the trustee until they have more information about the trustee’s alleged misdeeds. The judge could also allow the trustee to stay on pending a full trial on the petition. Litigation can continue for a prolonged period of time before a final decision is reached.
The cost of trustee removal can vary greatly depending on the circumstances of the case. In general, costs can skyrocket when the court is forced to get involved.
For example, if the trustee in question refuses to step down, a petition will need to be filed to try to have them removed. From there, costs can pile up. You not only will be paying attorney’s fees, but you will be paying court fees as well. And if the trustee challenges the petition, costs may be even higher.
On the other hand, if the trustee voluntarily resigns or agrees to step down for a small settlement sum during mediation, costs may be minimal.
Note that if a trustee is found to have been engaged in serious misconduct, they could be ordered to pay your attorney’s fees. In the same vein, if you bring a baseless claim against a trustee that they are then forced to defend, you could be ordered to pay their attorney’s fees.
It can take up to a year or longer to remove a trustee from a trust. That said, if there are concerns that a trustee could cause harm to the trust while trustee removal litigation is taking place, then the court may suspend them until it can decide the case.
Because of how long the trustee removal process can take, it is never a bad idea to speak with a lawyer about other options, such as holding a mediation to try to convince the trustee to voluntarily resign.
The process for replacement of a trustee can be straightforward or complicated, depending on the terms of the trust. California Probate Code section 15660 lays out the process for trustee replacement.
If the trust instrument provides a method for appointing a new successor trustee or names an alternate successor trustee, then the trust terms should be followed. But if this is not the case, all the beneficiaries entitled to an inheritance from the trust can agree on a trust company (a company formed to act as trustee) to fill the vacancy.
If neither of the first two options are viable, then the court will appoint the successor trustee, taking the beneficiaries’ preferences into consideration.
Whether a trustee can be voted out depends on the terms of the trust. For example, if the trust states that a unanimous vote among beneficiaries can result in removal of the trustee, then it is possible to vote out a trustee.
Under most other circumstances, however, the formal trustee removal process will need to be used.