June 4, 2010

Petition to Remove a Trustee

One of the most common problems with trust administration is the selection of a competent successor trustee who will manage the affairs of the trust after the original trust drafter(s), the settlor(s), have passed on. 

For example, husband and wife will typically select a child or close relative to serve as the trustee because of his or her familiarity with the trust beneficiaries, commonly the settlor’s children, and to conserve trust funds since professional trustee fees can be quite high. However, often the selection of a family member successor trustee ultimately proves imprudent. For instance, I have received a number of phone calls from beneficiaries asking that the trustee, almost always a family member, be removed.  There are two methods in which a trustee can be removed.

1. A trustee may be removed in accordance with the terms of a trust instrument. Prob C §15642.

For example, the trust instrument may grant a third-party the power to remove a successor trustee for cause or no cause.  Consequently, the third-party could remove a successor trustee for misappropriating trust funds, namely spending money on a Ferrari for their own personal use or an exotic vacation to Tahiti for their own benefit.

2. The trustee may be removed by a settlor, co-trustee or beneficiary via a probate petition under Prob C §17200. Prob C §15642(a). 

The common grounds for which a court petition would be ordered by the court include: breach of trust, insolvency of the trustee or other unfitness to administer the trust, hostility among cotrustees that impairs administration, the trustee's failure to act or declining to act, excessive compensation, substantial inability to manage the trust's resources or properly execute the duties of the office due to lack of mental capacity, substantial inability to resist fraud or undue influence or other good cause. Prob C §15642(b).

Now before you run off to the county probate court to file a petition to remove your despised Uncle Melvin, the successor trustee of your parent’s trust of which you are a beneficiary, please remember that all papers submitted to a California state court must be in conformity with Cal Rules of Ct 2.100-2.119 along with the local rules for each county superior court. In addition to proper formatting, the bigger dilemma is whether an unrepresented litigant can appropriately draft the petition (see practicing law) so that the court can grant the relief the petitioner is seeking if merited. For these two reasons, most petitioners hire an attorney to file and draft a petition if a significant amount of money is involved.