A trustee accepts a position that may inspire years of complex obligations. They have a responsibility to manage trust resources and distribute them as outlined in the trust documents. They receive compensation from the trust itself, but they may face regular demands on their time.
Usually, trust beneficiaries are happy to rely on a trustee to manage resources and make appropriate distributions. However, sometimes beneficiaries may need to take action because a trustee has not upheld their responsibilities. State statutes allow for the removal of a trustee in certain circumstances, including the three below.
1. A breach of fiduciary duty.
A trustee has an obligation to act in the best interests of beneficiaries. If they put their own benefit ahead of what beneficiaries require, they may be vulnerable to removal efforts.
2. A drastic change in circumstances
Trustees need to be able to competently and ethically fulfill their responsibilities. A variety of challenging personal circumstances could undermine a trustee’s capacity to continue overseeing trust administration. Pending criminal charges, personal medical challenges and even a pending bankruptcy could justify the removal of a trustee.
3. Incompetent trust management
Perhaps a trustee failed to properly secure resources or sold them for well below their fair market value. Maybe they have failed to take action as needed to preserve and maintain trust resources. In cases where a trustee has not fulfilled their responsibilities consistently and effectively, it may be possible to remove them, especially if their actions have verifiable economic consequences.
Initiating trust litigation to replace a trustee is sometimes the only viable solution. Beneficiaries may need assistance documenting a trustee’s incompetence or inappropriate conduct and then preparing for court, and that’s okay.