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To ensure that a trust operates as intended, it’s critical to appoint a trustee that you can count on to carry out your wishes. But to avoid protracted court battles in the event things don’t work out as planned, it’s a good idea to give your beneficiaries the right to remove and replace a trustee. Without this option, your beneficiaries’ only recourse would be to petition a court to remove the trustee for cause.

The definition of “cause” varies from state to state, but common grounds for removal include:

• Fraud, mismanagement or other misconduct,
• A conflict of interest with one or more beneficiaries,
• Legal incapacity,
• Poor health, or
• Bankruptcy or insolvency if it would affect the trustee’s ability to manage the trust.

Not only is it time consuming and expensive to go to court, but most courts are hesitant to remove a trustee that was chosen by the trust’s creator.

To avoid this situation, consider including a provision in the trust document that allows your beneficiaries to remove a trustee without cause if they’re dissatisfied with his or her performance. Alternatively, you could authorize your beneficiaries to remove a trustee under specific circumstances outlined in the trust document.

If you’re concerned about giving your beneficiaries too much power, you can include a list of successor trustees in the trust document. That way, if the beneficiaries end up removing a trustee, the next person on the list takes over automatically, rather than allowing the beneficiaries to choose a successor. Alternatively, or, in addition, you could appoint a “trust protector” with the power to remove and replace trustees and to make certain other decisions regarding management of the trust.

© 2021