How does a Trustee resign? By following the procedure in the Trust document. The Trust terms usually contain a resignation procedure to follow. The Trustee typically must give notice to the beneficiaries and to the new Trustee. This notice can be drafted by a Trust administration attorney. If there is no resignation provision, the Trustee must follow the California Probate Code (CCP). California Probate Code Sections 15640-15645 govern the procedure for Trustee removal.

What happens when the beneficiaries cannot agree on a successor Trustee? The Trustee can file a Petition in Probate Court for resignation. The Court will typically appoint a neutral licensed professional fiduciary.

In some instances, a Trustee refuses to resign. Beneficiaries can file a Petition in Probate Court to remove the Trustee.

Grounds for forcibly removing a Trustee by Court order include

  • The Trustee committed a breach of the Trust.
  • The Trustee is insolvent or otherwise unfit to administer the Trust.
  • Hostility or lack of cooperation among Co-Trustees impairs the administration of the Trust.
  • The Trustee fails or declines to act.
  • The Trustee’s compensation is excessive under the circumstances.

Filing a Petition to remove a Trustee is a lawsuit against the Trustee. Lawsuits typically take around 2 years to resolve. If the Trustee has committed certain types of fraud, such as misappropriating or stealing Trust funds, the beneficiaries can also seek reimbursement (called Trustee surcharge).