How to Remove a Trustee

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How to Remove a Trustee

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How to Remove a TrusteeNot everyone works out. And you have the right, as a beneficiary of a trust, to petition to remove the trustee of the estate if he or she proves to be incompetent, hostile, dishonest or otherwise unable to fulfill the responsibilities of administering the trust.

Here’s a quick definition of a trustee and a summary of the duties of the position.

A trustee can be a person (or a trust company) who has legal title to property, who holds that property for the benefit of another and who has assumed a legal duty (also called a fiduciary duty) to act in the best interests of the beneficiaries of the trust. As you can imagine, things can go awry.

Here’s an all too-frequent scenario from a recent case:

In a case involving a prominent Phoenix family that operated multiple businesses owned by their trust, the father had passed away a number of years earlier. The mother continued running the businesses, gradually turning over control to her adult children. One of the sons took control of the trust after the mother developed dementia.

The son used the money from the trust to enhance properties he would ultimately inherit. He also bought himself a new car and started taking lavish cruises and vacations.

My clients – the siblings of this trustee – turned to me for help. First they obtained evidence of wrongdoing. In this case, they were able to get copies of checks written from the trust directly to the trustee. This gave us enough to petition the court and get the son removed as trustee and replaced with a private fiduciary.

Trusts can be set up to allow for safeguards in case of wrongdoing. That is, they contain trigger points that can lead to the removal of a trustee.

For trusts that don’t specify a mechanism to remove a trustee, the court recognizes other reasons. Here are three:

  1. If the trustee has committed a breach of the fiduciary duties of care over the assets or loyalty to the beneficiaries. Examples include failing to pay taxes, stealing assets, and not following the specifications of the trust.
  2. If the trustee is unfit, unwilling or persistently fails to act in the best interest of the beneficiaries and the trust, the court can remove the trustee.
  3. In come cases, the circumstances surrounding the trust can change significantly or all qualified beneficiaries can request the removal of the trustee. The court can review the case and remove the trustee if it deems this for the best interest of the beneficiaries, as long as this isn’t inconsistent with the original specifications and intent of the trust.

If you are the beneficiary of a trust, it’s important to know what to do if the assets are being mismanaged. Trusts are normally very private affairs. In addition, trusts, being civil matters, are outside the jurisdiction of the police. There’s typically no court supervision and no government regulation to make sure that the trust is being run properly. It’s up to you and your attorney to pay attention to how a trust is being managed.

You need to take immediate action if you believe money is being misused. Proactive action increases your ability to protect your inheritance. Contact an experienced probate attorney at the first indication that a trustee is unethical or irresponsible with trust assets.

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5 Comments

Rachel

February 3, 2016at 6:20 am

Going through this right now. Have had to instigate a lawsuit against Trustees who are relatives, as no report, accounting or distribution has been done two years after the Trustmaker died. It is very stressful.

    Paul Deloughery

    March 24, 2016at 8:41 am

    I suggest that you get a probate litigation attorney ASAP. Money and property has a way of disappearing. It is has been spent (or property has been sold), it is hard to fix the situation.

LJ Watson

October 11, 2016at 2:37 pm

Me and my sister are going thru the same thing. Our grandmother passed away almost 4 years ago. Our Aunt was named Trustee/beneficiary, we are named beneficiaries due to our mother predeceasing our grandmother. The Aunt has continued to live in the home which is part of the trust estate along with another beneficiary. She has spent all the trust estate account money on herself, her boyfriend who is also living there and the other beneficiaries. She has provided us with no proper accounting and even asked us to help pay property taxes at one time. Me and my sister have received nothing. We’ve hired an attorney and are beginning the Ex Parte motion for immediate removal of her as trustee.

Adam

December 11, 2016at 4:49 pm

This is exactly what has happened to me. My grandmother passed away 2 years ago and I am to inherit 1/4 the residue of the trust and 1/2 her property. My aunt and sister are the co-trustees, and I do not get a long with either one of them. I asked last May for an accounting and they never gave me one. It has been 6 months and almost 7 when I asked….and nothing. They also live in the property I am supposed to co-inherit and they do not have jobs and are living off the interest of the money in the Trust, and who knows? Maybe spending all the assets too. I hired an attorney and the hearing is coming in January. You never know what trustees might do when they let the power and money get to their head. If you are owed something and it was left to you – do something about it and do not wait! My lawyer said that he would be very embarrassed going before a probate judge if he were in their shoes. 😉

    Paul Deloughery

    December 17, 2016at 9:23 am

    You need to contact a probate litigation attorney right away. Is this in Arizona? If so, please call us at 602-443-4888.

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