When drafting an estate plan, it’s critical to select the right trustee to carry out your wishes and protect your beneficiaries. It’s also important to establish procedures for removing a trustee in the event that circumstances change.
Failing to do so doesn’t mean your beneficiaries will be stuck with an inadequate trustee. But they’ll have to petition a court to remove the trustee for cause, which can be an expensive, time-consuming and uncertain process. Making the process more onerous is the fact that courts generally are reluctant to remove a trustee who was hand-picked by the trust maker.
Reasons for removing a trustee
Grounds for removing a trustee vary according to state law, but typically include:
- Conflicts of interest or lack of cooperation with beneficiaries,
- Insolvency or bankruptcy (if it would jeopardize trust administration),
- Mismanagement, fraud or other misconduct,
- Poor health, or
- Legal incapacity.
To avoid the need for court intervention, include procedures for removing a trustee in your trust agreement. You might allow beneficiaries to remove a trustee without cause if they’re dissatisfied with his or her performance. Or you might provide for removal of a trustee under specific circumstances defined in the trust agreement.
Provide a list of successor trustees
Your trust agreement also should include a list of successor trustees. If one trustee is removed, the next person on your list becomes the new trustee. Another option is to appoint a trust protector — a “super trustee” empowered to make certain decisions, including firing a trustee and appointing a new one. If you have questions regarding trustees, please contact us.