Whether you created a revocable or irrevocable trust or you are the beneficiary of a trust, there may come a time when you think the trustee needs to be removed and replaced. Trusts can be a very beneficial component of an estate plan. They offer probate avoidance, tax advantages and other benefits concerning control of assets; however, it can become a complex fiduciary arrangement resulting in disputes between the settlor, trustee and/or beneficiaries.
The person creating the trust, referred to as the settlor, transfers assets into the trust which are then managed by the trustee for the benefit of designated beneficiaries. The trust document can contain language giving instructions on how the assets should be managed. The trust agreement should also state the circumstances under which a trustee may be removed. Most trust agreements will also name a successor trustee.
Maryland state law provides guidelines surrounding the trustee’s duties and responsibilities as well as the obligation of the trustee to follow the terms of the trust agreement, to act in good faith, and do what is in the best interests of the beneficiaries.
Legal grounds to remove a trustee may include:
-Knowingly violating the terms of the trust;
- Mismanaging trusts assets;
-Failing to make an accurate accounting;
-Conflict of interest or self-dealing; and
-Mental incapacity of the trustee.
A few other situations that may be more difficult to prove or enforce include removing a trustee for charging excessive fees or consistent disagreements with beneficiaries. It must be shown the trustee is uncooperative or hostile which leads to ineffective management or curtails the goals of the trust.
For a beneficiary or group of beneficiaries to remove a trustee for any of the above-named reasons, it generally requires a majority vote of the beneficiaries. It may be necessary to petition the court for removal and that can be filed by either a co-trustee or beneficiary.
If you are having issues with a trustee and need assistance in removing and replacing the trustee, contact the experienced estate planning attorneys at Stouffer Legal in the Greater Baltimore area to set up a consultation.
