Some trustees can be irresponsible or take a personal ownership interest in trust assets. These types of trustees act against the interests of beneficiaries and instead act as though they are doing the beneficiaries favors with limited answers, withholding information. Trustees often ignore beneficiary inquiries, and leave them totally “out of the loop.” They are absolutely required to send copies of the trust instrument to beneficiaries. Instead they waste trust assets threatening to defend themselves with attorneys if anyone questions their actions.
If your trust is being administered by a trustee described above, they may be removed. Even if the trust contains a no-contest clause, the beneficiary can ask a court to remove a trustee under California law. This petition is not a contest. Trustees are most commonly removed for breaching their fiduciary duties, but they can be remove for any of the reasons below stated in California Probate Code Section 15642.
How Trustees Are Removed By Beneficiaries
Basically, trustees may voluntarily resign, they may be removed pursuant to terms of the trust, or they may be removed by court order.
Removal By Terms of Trust
According to Probate Code §15642, trustees may be removed in accordance with the terms of the trust. Some trust instruments contain terms giving one or more persons the power to remove a trustee. Some of those powers are limited to specific circumstances and others are more broad. The power is often linked to the power to appoint a successor trustee.
Removal By Court
The court may remove a trustee by its own motion or pursuant to a petition seeking removal filed by settler, co trustee or beneficiary.
Grounds for Removal
Pursuant to Probate Code §15642(b) a trustee may be removed for any good cause including, but not limited to, any of the following reasons:
A. Breach of trust;
B. Insolvency of the trustee or other unfitness to administer the trust;
C. Hostility among co trustees that impairs administration;
D. The trustees failure to act or declining to act;
E. Excessive compensation;
F. The sole trustee is a disqualified person;
G. Other good cause.
Probate Code §21350(a)
(a) A trustee may be removed in accordance with the trust instrument, by the court on its own motion, or on petition of a settlor, cotrustee, or beneficiary under Section 17200.
(b) The grounds for removal of a trustee by the court include the following:
(1) Where the trustee has committed a breach of the trust.
(2) Where the trustee is insolvent or otherwise unfit to administer the trust.
(3) Where hostility or lack of cooperation among cotrustees impairs the administration of the trust.
(4) Where the trustee fails or declines to act.
(5) Where the trustee’s compensation is excessive under the circumstances.
(6) Where the sole trustee is a person described in subdivision
(a) of Section 21350 or subdivision (a) of Section 21380, whether or not the person is the transferee of a donative transfer by the transferor, unless, based upon any evidence of the intent of the settlor and all other facts and circumstances, which shall be made known to the court, the court finds that it is consistent with the settlor’s intent that the trustee continue to serve and that this intent was not the product of fraud or undue influence. Any waiver by the settlor of this provision is against public policy and shall be void. This paragraph shall not apply to instruments that became irrevocable on or before January 1, 1994. This paragraph shall not apply if any of the following conditions are met:
(A) The settlor is related by blood or marriage to, or is a cohabitant with, any one or more of the trustees, the person who drafted or transcribed the instrument, or the person who caused the instrument to be transcribed.
(B) The instrument is reviewed by an independent attorney who (1) counsels the settlor about the nature of his or her intended trustee designation and (2) signs and delivers to the settlor and the designated trustee a certificate in substantially the following form:
CERTIFICATE OF INDEPENDENT REVIEW
I, _______________________________, have reviewed (attorney’s name) ____________________and have counseled my client, (name of instrument) __________, fully and privately on the nature and (name of client) legal effect of the designation as trustee of ___ (name of trustee) contained in that instrument. I am so disassociated from the interest of the person named as trustee as to be in a position to advise my client impartially and confidentially as to the consequences of the designation. On the basis of this counsel, I conclude that the designation of a person who would otherwise be subject to removal under paragraph (6) of subdivision (b) of Section 15642 of the Probate Code is clearly the settlor’s intent and that intent is not the product of fraud or undue influence.
(Name of Attorney) (Date)
This independent review and certification may occur either before or after the instrument has been executed, and if it occurs after the date of execution, the named trustee shall not be subject to removal under this paragraph. Any attorney whose written engagement signed by the client is expressly limited to the preparation of a certificate under this subdivision, including the prior counseling, shall not be considered to otherwise represent the client.
(C) After full disclosure of the relationships of the persons involved, the instrument is approved pursuant to an order under Article 10 (commencing with Section 2580) of Chapter 6 of Part 4 of Division 4. (7) If, as determined under Part 17 (commencing with Section 810) of Division 2, the trustee is substantially unable to manage the trust’s financial resources or is otherwise substantially unable to execute properly the duties of the office. When the trustee holds the power to revoke the trust, substantial inability to manage the trust’ s financial resources or otherwise execute properly the duties of the office may not be proved solely by isolated incidents of negligence or improvidence. (8) If the trustee is substantially unable to resist fraud or undue influence. When the trustee holds the power to revoke the trust, substantial inability to resist fraud or undue influence may not be proved solely by isolated incidents of negligence or improvidence.
(9) For other good cause.
(c) If, pursuant to paragraph (6) of subdivision (b), the court finds that the designation of the trustee was not consistent with the intent of the settlor or was the product of fraud or undue influence, the person being removed as trustee shall bear all costs of the proceeding, including reasonable attorney’s fees.
(d) If the court finds that the petition for removal of the trustee was filed in bad faith and that removal would be contrary to the settlor’s intent, the court may order that the person or persons seeking the removal of the trustee bear all or any part of the costs of the proceeding, including reasonable attorney’s fees.
(e) If it appears to the court that trust property or the interests of a beneficiary may suffer loss or injury pending a decision on a petition for removal of a trustee and any appellate review, the court may, on its own motion or on petition of a cotrustee or beneficiary, compel the trustee whose removal is sought to surrender trust property to a cotrustee or to a receiver or temporary trustee. The court may also suspend the powers of the trustee to the extent the court deems necessary.
(f) For purposes of this section, the term “related by blood or marriage” shall include persons within the seventh degree.