There are many benefits to starting a trust, and the person placed in charge of managing the trust on behalf of its beneficiaries is called the trustee. In most situations, the trustee manages the trust well and in the beneficiaries’ best interest; however, sometimes situations arise that necessitate the removal of a trustee. Courts only allow for the removal of a trustee under specific circumstances, so if you would like a trustee removed from your trust, it is important that you secure the legal services of a qualified attorney to handle your case. At the office of The Inheritance Recovery Attorneys, our knowledgeable attorneys have experience in trustee removal cases and are here to help. Call or contact the office today to schedule a consultation of your case.
Failing to Comply With Trust Terms
One of the main reasons for removing a trustee from a trust is when the trustee fails to comply with the trust terms. The creator of the trust, the trustor, creates the terms of the trust that must be abided by the trustee for the benefit of the beneficiaries. If the trustee fails to adhere to the terms of the trust or ignores the terms set by the trustor, the trustee can be removed as the manager of the trust.
Mismanagement or Neglect of Trust Assets
As the trustee, trust assets are expected to be managed properly and for the benefit of the trustees. This can include making sound investments, selling or buying assets on behalf of the trust, or making distributions to beneficiaries. If the trustee fails to manage trust assets properly or neglects his duties as trustee, the beneficiaries can petition for the trustee’s removal.
Another reason to remove a trustee is if it is discovered that the trustee is self-dealing in his management of trust assets. This means that the trustee is using the knowledge and assets of the trust in order to financially benefit from his position as trustee. This is also known as a conflict of interest, and one common example is if a trustee purchases assets from the trust for far less than market value or sells their own assets to the trust at an incredibly inflated price. A trustee can be removed for self-dealing because he is placing his own wellbeing above those of the beneficiaries. However, one exception does exist when the trustee is a large banking or financial institution. If the beneficiaries sign a conflict of interest waiver, the trustee can continue to operate even if some level of self-dealing occurs.
Violation of Fiduciary Duties
A trustee can be removed from the management of the trust for any violation of fiduciary duties. Some of the other reasons listed, like self-dealing and mismanagement of a trust can fall under the umbrella of a fiduciary breach. As a fiduciary for the trust, a trustee is obligated to act in good faith and in the best interests of the beneficiaries. Some of the most common causes of a fiduciary breach for a trustee include, but are not limited to, the following:
- Fraud or misappropriation of trust assets
- Charging excessive fees
- Inability to cooperate with the other trustees or to get along with the beneficiaries
- Financial insolvency of the trustee, such as when the trustee has filed for bankruptcy, and more.
If you suspect that the trustee of your trust has breached his fiduciary duty, it is critical that you speak with an attorney as soon as possible about your case in order to preserve any evidence of a potential violation by the trustee.
Finally, if none of the other situations apply, a beneficiary can petition the court for the removal of the trustee for good cause. This reason is purposefully vague because a number of things could be considered good cause. One common reason for good cause removal is if the trustee is elderly and the beneficiaries suspect Alzheimer’s disease or other form of dementia. The court will consider the specific facts of your case when determining whether to remove a trustee for good cause, but the bar is set high when petitioning for this reason.
Talk to a Lawyer Now
Violations by a trustee that rise to the level of removal can have significant impacts on the trust assets and beneficiaries to the trust. To learn more about when a trustee can be removed from a trust and for an appointment to review your case, call the office or contact The Inheritance Recovery Attorneys today.