How hard is it to change a trustee?
Hi, it’s Guy DiMartino. I am in Northwest Indiana estate planning and probate lawyer. I bring these questions to you because these are questions that I receive all the time. And today I’m going to answer the question – how difficult or how easy is it to change a trustee in a trust. Before we get started though, if you have any questions about an estate planning matter here in Northwest Indiana, you can always set up an appointment with me at indianastatemeeting.com. We can meet in person, we can meet by phone, we can meet by video conference. So, the other day I was meeting with some folks regarding a trust and they were wondering, when appointing the trustees how difficult would it be to change the trustee at later point in time. And I said, well, that’s really a loaded question because in order to understand it, we have to understand the nature of a trust.
So, a trust is pretty much a contract. A trust is a contract between the grantor and the trustee. The first place that we would have to look to determine how we go about changing a trustee is the trust document in and of itself. So, if somebody retains the power of appointment or if somebody retains the power to modify or edit or change the trust, the folks who have the power of appointment or the ability to edit or modify or change the trust can go ahead and change the trustee. This would be one way to change a trustee.
If the initial grantor or grantors have passed away and the successor trustee is in place, again, you have to look at the trust document to see if one or more of the beneficiaries have the power of appointment. If a class of person(s) or beneficiaries have a power of appointment with the ability to remove or change the trustee then the trustee can be changed under the terms of the trust.
Otherwise, if the trustee is doing something wrong, and there is a problem with the administration of the trust, you’d have to look at state law and you’d have to determine whether the trustee is fulfilling his or her responsibilities as trustee. And if the trustee is not fulfilling his or her responsibilities, then you can petition a court to remove the trustee. The law doesn’t allow a trustee to be removed because a beneficiary just doesn’t like what the trustee is doing, there must be a problem.
For instance, maybe the trustee is not administering the trust according to the terms of the trust or the purpose of the trust. Maybe the trustee is taking advantage of some of the trust property and self-dealing, or the trustee breaching their fiduciary duty, or they’ve done things that you believe are a conflict of interest. Removing a trustee under these circumstances is forcefully removing the trustee and will require a court order or consent from the trustee to be removed.
In summary, the grantor can change the trustee at any time if he or she retained the power of appointment, as long as he or she is still competent to do so. If the trustee is misbehaving it may require court action to remove the trustee.