Two things will get a Trustee removed quickly: death and stealing. By stealing I mean really stealing—like tens or even hundreds of thousands of dollars missing or misappropriated.
But what about Trustees who violate their fiduciary duties but haven’t (1) died, or (2) stolen large sums of money? Those Trustees can be harder to remove from office. You as a beneficiary may believe, for good reason, that a Trustee is acting improperly and should be removed. In fact, a large numbers of private Trustees fail to meet their fiduciary duties primarily because they don’t know what those duties are (see our earlier post on this topic). But assembling the necessary evidence and arguments to justify removing a Trustee before the Court can be tricky and time consuming.
A client of mine told me that Trustee removal seems to be a case of death by a thousand lashes. In other words, the removal must be supported by building a case using as many fiduciary violations as you can find. After a good number of violations are assembled, then you have a shot at Trustee removal. This does not mean that it is hard to hold a Trustee liable for his or her breaches. Finding that a Trustee is personally liable for a given breach can be easier than having the Trustee removed.
In my experience, it can be hard to remove a Trustee because the Court puts a good deal of emphasis on the Settlor’s choice of that Trustee in the first place. Also, many Courts are reluctant to suspend or remove a Trustee temporarily, absent death or substantial stealing, because they don’t want to “shoot from the hip.” This means that the Trustee removal issue must go to trial where proper evidence can be presented by both parties to determine if removal is warranted.
Under the California Probate Code, Court’s have wide discretion to remove Trustees. Removal can be based on the following grounds:
- Any provision in the Trust document for removal (some Trust’s will specify a removal procedure),
- Where a Trustee has committed a breach of Trust (again must have a number of examples of this to be effective, absent death or substantial stealing),
- Where the Trustee is insolvent or unfit to administer the Trust (a loose standard to show a Trustee is “unfit”),
- Where hostility or lack of cooperation among Co-Trustees impairs the administration of the Trust,
- Where the Trustee fails or declines to act,
- Where the Trustee’s compensation is excessive under the circumstances,
- Where the Trustee is the same person who drafted the Trust (or related to the person who drafted the Trust).
Many times beneficiaries will focus on one item, such as where a Trustee has committed a breach, and think that the one occurrence they have witnessed is sufficient for removal. But if the Court is reluctant to force removal (which most Court’s are), then how big of a breach does it have to be to justify removal? That depends on the facts of the case. The more examples you have of a Trustee breaching his duty, and the more severe each example is, the more likely you are to obtain Trustee removal. Hence, the death by a thousand lashes. On the other hand, if you have one big breach, then that single lash may be enough to rid the Trustee from office.