Selecting the right trustee to administer your estate is a crucial part of ensuring that your assets are distributed according to your wishes and that your estate is settled correctly. While many people can and should put a great deal of thought into selecting a trustee to administer their estate, the process of selecting a trustee often stops there. Whether a trustee is a financial institution, attorney, or close family friend, you need to include a mechanism to remove that trustee if the need to do so arises. An experienced estate planning attorney can help you design this type of mechanism, which could help your loved ones avoid the often-lengthy legal process of removing a trustee in the absence of formal instructions.
When can a trustee be removed?
There are many reasons you may wish to revise your estate’s trustee. Perhaps you originally selected a family member that has become estranged because of divorce. You may have selected a sibling that has predeceased you. If you nominated a financial institution, it could have been bought out by another company that you don’t want to deal with. Whatever the reason for wanting to remove a trustee, New York law states that the following constitute some legal reasons for a court to remove a trustee:
- The Trustee Is Ineligible or Has Been Disqualified by Statute – If state statute will prohibit an individual from serving as a trustee, they can be removed;
- Occurrence of Contingent Circumstances – If a trustee’s appointment is to end based on certain circumstances occurring, such as divorce, then a court can remove them;
- The Trustee Is Unfit – Mismanagement of tasks a trustee is responsible for can result in their removal, as can other forms of misconduct that occur in the trustee’s capacity;
- Disobedience – If a court orders a trustee to do something and the trustee does not comply, they can be removed;
- Unqualified – If a trustee is unfit to execute their duties because of factors like substance abuse or other issues surrounding the performance of their duties, they can be removed;
- Removal of Property – If a trustee has removed property from the estate for personal use, or if property from the estate has been removed from the state, the court can remove them;
- False Statements of Material Fact – If a trustee was selected as trustee based on false statements, even those that may have been made in good faith, they may be removed;
- Failure to Account – Courts will establish a timeline within which a trustee must report to the court, and failing to do so can result in the trustee’s removal.
While this is not an exhaustive list of circumstances in which a trustee can be removed, typically New York Surrogate’s Court only removes a trustee in extreme circumstances because doing so can be very disruptive to probating the estate.
How can you remove a trustee?
In New York, the process typically begins by filing paperwork with the appropriate Surrogate’s Court to commence removal proceedings. Only certain people may initiate these proceedings, typically including:
- A co-trustee;
- A creditor;
- An interested party;
- A party on behalf of an interested infant; and
- Surety on the bond of a trustee.
Standing to challenge a trustee can vary depending on the type of assets involved. An experienced estate planning attorney can help you understand the legal process for removing a trustee. You may also be able to establish provisions within the trustee agreement by which beneficiaries can remove a trustee in certain circumstances, such as if a majority of them believe doing so is in the best interests of the estate. Providing for an alternate preferred trustee in the case of such removal can help your beneficiaries expedite the process, too.