Knowing When to Remove a Trustee

EstatePlanning4

Trusts are a key component of many estate plans because of the flexibility they offer for managing assets while alive and after death. At its most basic, a trust is legal arrangement that allows a trustee to hold title over a property for the benefit of beneficiaries. Living trusts, for example, allow the creator to also serve as trustee during his/her life in order to retain control over the trust property and the ability to withdraw funds as needed. Outside of living trusts, most trusts are irrevocable, and the creator loses control over the property once it is transferred into the trust. At that point, trustee takes over management. Thus, trustees have a lot of power over what happens to trust assets, and as a result, have a number of legal duties they must fulfill as part of serving in this role. In fact, trustees can be removed from their positions for failing to perform required responsibilities, and are even subject to legal liability for certain acts and omissions. Understanding the obligations trustees are bound to carry out, and the grounds to remove them, is information that could reveal which trustee one should choose.

Trustee Duties

First and foremost, trustees must make decisions concerning the trust that are in the interests of the beneficiaries. This means the trustee’s motivation on any trust-related issue must not stem from potential personal gain or that of a close associate. Further, a trustee must administer a trust prudently, with an eye toward fulfilling the trust’s purpose, by employing “reasonable care, skill and caution” when making decisions on the trust’s behalf. A large part of a trustee’s practical responsibilities involves keeping accurate records of trust property and providing an accounting of trust assets to beneficiaries on at least an annual basis. Finally, trustees have a duty to distribute the trust proceeds in a timely manner when the trust terminates or according to the terms of the trust.

Removing Trustees

The removal of a trustee can only be accomplished through a petition to a court, and only certain persons or entities have the right to request the removal of a trustee, including the trust creator, a co-trustee (if more than one trustee is appointed) and any beneficiaries. In addition, a court may remove a trustee on its own initiative. The law permits the removal of a trustee in four circumstances:

  • the trustee committed a serious breach of trust, such as depositing trust funds in the trustee’s personal bank account;
  • if the ability to administer the trust is hampered by a lack of cooperation among co-trustees;
  • the trustee is unfit, unwilling or continually fails to effectively administer the trust, and removal is in the best interests of the beneficiaries. This basis for removal is typically the one used as justification and typically relates to a trustee not responding to beneficiary requests or taking any action to assert control over the trust property; or
  • a substantial change in circumstances has occurred, or removal is requested by all the beneficiaries, and the court determines removal is in the beneficiaries’ best interest. In addition, the court must also decide that removal does not conflict with the purpose of the trust, and an appropriate replacement is available.

Get Legal Advice

A trustee holds great responsibility that must be viewed with seriousness and care. If you as a beneficiary believe that a trustee is not living up to his/her obligations, talk to an attorney about your options. Litigation may not be necessary to resolve the issue, but an experienced trust attorney can elevate your case and determine what the best course of action might be. The Tampa law firm of Bubley & Bubley, P.A. handles all aspects of trust and estate matters, and can help ensure your interests are fully protected. Contact us for a free consultation.

Resources:

leg.state.fl.us/STATUTES/index.cfm?App_mode=Display_Statute&Search_String=&URL=0700-0799/0736/Sections/0736.0706.html

leg.state.fl.us/STATUTES/index.cfm?App_mode=Display_Statute&Search_String=&URL=0700-0799/0736/Sections/0736.0804.html

Contact Form Tab