Trustees manage resources and make distributions to beneficiaries in accordance with the instructions provided by a settlor, sometimes referred to as a trustor. Many times, the same person oversees trust administration from the earliest stages until the trust no longer has any resources to manage and distribute.
Occasionally, beneficiaries and other concerned parties may seek the removal of a trustee due to misconduct. If there is proof of embezzlement or other misconduct, the courts can remove and replace a trustee who has violated their fiduciary duty to beneficiaries. Other times, beneficiaries could assert that the trustee is no longer fit to hold that position despite a lack of clear misconduct.
What scenarios might justify a claim of a trustee being unfit?
1. Personal insolvency
Trustees are responsible for financial management and have access to resources with minimal immediate oversight. In cases where they become insolvent and file for bankruptcy, the courts may agree that their removal is appropriate.
2. Pending criminal prosecution
Criminal charges can cause stress and generate major expenses. Especially when criminal allegations relate to financial misconduct or other breaches of trust, pending prosecution can be reason to remove a trustee.
3. Serious medical challenges
A trustee who has diligently fulfilled their obligations could become incapable of continuing to do so after a sudden medical event. Strokes or brain injuries acquired during car crashes are among the medical issues that diminished a trustee’s capacity to properly administer a trust.
Concerned beneficiaries who are aware of changes in a trustee’s circumstances may need to petition the courts for their removal. Reviewing their situation with a trust litigation lawyer can help concerned parties take appropriate actions.