When someone appoints another individual as the trustee of their trust, the trustee becomes responsible for carrying out the directions in the trust document, solidifying the decedent’s legacy, and taking care of those that the decedent loved the most. Unfortunately, just because someone is a trustee, it doesn’t necessarily mean that they are trustworthy. Countless reasons could warrant removing and replacing a trustee. If you are a beneficiary dealing with an incapable or malicious trustee, working with a premier attorney is essential to ensure you get the inheritance you deserve. We are here to break down what happens when a trustee is removed. Here is what to expect after removing a trustee and why partnering with a trust litigation lawyer is critical.
What Are the Grounds for Removing a Trustee?
Before we get into what happens when a trustee is removed, let’s cover different situations that warrant removing a trustee. Not every disagreement constitutes valid grounds for removal. Common circumstances where a trustee can be properly removed include the following:
- The trustee breaches their fiduciary duty: Trustees have a legal obligation to uphold their fiduciary duties as soon as they take on this role. While these duties take many forms, the idea of “fiduciary duty” in connection with trusts boils down to the trustee’s obligation to follow the trust document and to make decisions that are in the best interests of the trust’s beneficiaries. If the trustee has breached this duty, you have grounds to remove and replace the trustee.
- The trustee mismanages assets: A trustee doesn’t have to act with ill intent to warrant removal. If a trustee demonstrates an inability to sufficiently manage assets in the trust, this is grounds for removal, since it can hurt the trust. For example, if the trust holds complex assets and the trustee lacks the necessary skills and expertise to manage them, you are within your rights as a beneficiary to remove them.
- The trustee fails or refuses to act: If a trustee unreasonably delays in their obligations, or outright fails or refuses to act and/or to carry out the responsibilities called for by the trust, this could also warrant removal.
- The trustee wants excessive compensation: In most situations, trustees have a right to receive trustee fees. However, such fees are required to be “reasonable” as well as proportional to the amount of work they’ve put in. If a trustee charges excessive fees, you are within your rights to remove them, since it could reduce your inheritance.
- The trustee displays a conflict of interest: If a trustee has a personal stake in the trust and its assets that conflict with the trust’s goals and other beneficiaries’ interests, this is grounds for removal. Barring some exceptions, like when a trustee is also a beneficiary or where a trustee takes “reasonable” and “proportional” fees as discussed above, a trustee should not benefit from their duties as trustee. Even when the trustee is a beneficiary, they must act objectively and cannot place their individual interests over those of the trust or other beneficiaries.
Acting quickly is essential as soon as you believe you have grounds for removing a trustee. Contact a trust litigation lawyer, and they will assess your case and walk you through the legal process. Waiting too long to consult an attorney can result in the trustee irreversibly damaging the trust.
Your attorney will file a petition with the proper court, navigate the trust litigation process, investigate all relevant facts about your case, subpoena and gather evidence per the court’s Rules of Evidence and Procedure, conduct depositions, get witness testimony (including experts), and present your case in a compelling way that proves removal is warranted.
The trust litigation process is emotionally charged and complicated, and it can be lengthy and contentious depending on the situation. An attorney will enforce your rights, recover assets, pursue damages, and ensure a smooth transition to a new trustee.
“Removing a trustee is complicated. You must understand California trust laws and the trustee’s fiduciary duties to determine if you have grounds to remove them while also understanding how to navigate trust litigation. Ultimately, engaging an attorney with the experience and expertise is the best and most efficient way to hold a trustee accountable and remove them.”
– Nicholas D. Porrazzo, Partner, Gokal Law Group
Related Article: An Expert Guide to Removing and Replacing the Trustee
What Happens When a Trustee is Removed?
You can expect a few things after your attorney has proven the trustee is unfit for the role. First, the trustee must provide a trust accounting (a detailed record of all trust assets and transactions). Your attorney will review this document closely to ensure you have recovered all losses.
One significant benefit of working with an attorney is they will have the resources and network to bring in professional help if necessary to interpret any trust accounting, which are usually complex financial documents. The accounting will give you an idea of the trust’s current status and makeup of assets before a new trustee assumes the responsibility of administration.
The next step of this process depends on the trust document. If the trust document names a successor trustee, they will become the new trustee. However, if the document provides no guidance in this area, the beneficiaries may be asked to agree on a trust company or individual to replace the trustee. If neither option is viable, the court will likely choose a new neutral party.
Asset recovery is one of the most crucial components of this process. If the trustee has mismanaged, commingled, misallocated, or outright stolen any trust assets, the court will order them to return lost funds and pay damages. While rare, depending on the severity of the case, the trustee could also face more severe penalties, including double, triple, or punitive damages, or even criminal charges and possible jail time.
Related Article: California Trust Law: Can a Trustee Be Held Personally Liable?
Now that You Know What Happens When a Trustee is Removed, Contact Gokal Law Group to Hold Your Trustee Accountable.
Whether they are stealing from the trust or lack the experience necessary to perform the role, an unfit trustee can pose a severe danger to the trust. Not only do they jeopardize your inheritance, but they also undermine the integrity of the trust and legacy of your deceased loved one. You deserve to work with an attorney who can safeguard your inheritance and preserve the integrity of the trust.
Visit our Contact page to schedule a free consultation and remove and replace a trustee.
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