Trustees may serve in their role administering a trust for years. Although some trusts are essentially estate planning tools that simply govern the distribution of property, many trusts aim to preserve specific resources such as real estate or business holdings. The trustee may need to manage resources indefinitely and make occasional distributions to beneficiaries.
Occasionally, the beneficiaries of a trust may begin to question whether the trustee has done their job well. In some cases, such as when the resources in the trust are worth millions of dollars, the misconduct or failures of a trustee could cost beneficiaries a great deal.
When do beneficiaries of a trust have the option of seeking the removal of its trustee?
California law provides specific guidelines
There are numerous reasons why beneficiaries can ask the courts to remove a trustee and replace them with someone else. Perhaps the trustee has experienced financial setbacks. If they file for bankruptcy or have gone through a protracted period of financial hardship, the courts may agree to remove them to prevent either embezzlement or mismanagement of resources.
Other times, concerns about the diminishing value of a trust might lead to trust litigation to remove the trustee. If a trustee has made repeated poor choices regarding the investment or management of trust resources, their decisions could diminish the overall value of the trust and impact what the beneficiaries ultimately receive from it. In scenarios where a trustee’s actions have had a provable negative impact on the trust, beneficiaries may have grounds to seek their removal.
Scenarios involving a trustee rendered incapable of fulfilling their obligations can also lead to litigation. A trustee’s incarceration or long-term hospitalization might warrant their replacement with someone else.
Obviously, situations in which there is clear evidence of a trustee embezzling from the trust or self-dealing for personal enrichment could result in actions to remove the trustee. The greater the overall value of trust resources and the longer the trustee’s services may be necessary, the more important it may be to take timely action in response to mistakes or misconduct on the part of the trustee.
Initiating trust litigation in the California courts can potentially help people preserve the resources used to fund a trust. Those who know when they have the option of taking legal action can assert themselves as necessary when a trustee fails in their duty.