How to Remove a Trustee in California
The process of removing a trustee involves several steps, depending on the circumstances.
Step 1: Review the Trust Document
Some trusts contain provisions for removing a trustee, such as:
- Allowing beneficiaries to vote for removal.
- Providing a process to petition a co-trustee or trust protector.
If the trust does not specify a removal procedure—or the trustee refuses to step down—court action may be necessary.
Step 2: Request a Trust Accounting
If you suspect financial misconduct, the first step is demanding a formal trust accounting. If the trustee refuses, this strengthens the case for removal.
Step 3: Attempt to Resolve the Issue Without Litigation
Litigation is often expensive and time-consuming. Some trustees will resign voluntarily if confronted with evidence of wrongdoing. Attempting an out-of-court resolution can help avoid unnecessary legal battles.
Step 4: File a Petition in Probate Court
If the trustee refuses to step down, the next step is filing a petition in California probate court to request their removal. The petition should include:
- Specific reasons for removal, such as mismanagement or self-dealing.
- Evidence of misconduct, including financial records and witness testimony.
- A request for a new trustee to take over the administration of the trust.
Once the petition is filed, the court will hold a hearing to review the case.
What If the Trustee Resists Removal?
Some trustees fight removal efforts and may:
- Refuse to turn over trust documents.
- Delay court proceedings to avoid accountability.
- Use trust assets to pay for their own legal defense. If this happens, the court may freeze trust assets to prevent further financial harm.
- Order a forensic accounting to investigate missing funds.
- Impose financial penalties against the trustee for misconduct.
If wrongdoing is proven, the court may also require the removed trustee to repay stolen or mismanaged funds out of their own pocket.
What Happens After a Trustee Is Removed?
Once a trustee is removed, the trust must transition to a new trustee as quickly as possible. This successor trustee may be:
- A co-trustee who was already managing the trust.
- A successor named in the trust document.
- A court-appointed professional fiduciary if no other options are available.
The new trustee is responsible for:
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- Reviewing the trust’s financial records to identify past issues.
- Ensuring all assets are properly managed and distributed.
- Correcting any financial damage caused by the previous trustee.
When Can a Trustee Be Removed?
Trustees are legally bound by fiduciary duties, meaning they must act in the best interests of the beneficiaries. When they fail to do so, removal may be necessary.
1. Breach of Fiduciary Duty
A trustee has an obligation to prioritize the interests of the beneficiaries over their own. When a trustee misuses trust funds or engages in self-dealing, they violate this duty. Common examples include:
- Using trust funds for personal expenses, such as vacations or luxury purchases.
- Failing to distribute assets as required by the trust.
- Making reckless financial decisions that harm the trust’s value.
2. Refusing to Provide a Trust Accounting
Under California Probate Code §16062, trustees must provide periodic accountings to beneficiaries upon request. This document should detail:
- The trust’s assets at the time of the grantor’s death.
- All expenses paid from the trust, such as burial costs or debts.
- Income received by the trust, including rental income or insurance payouts.
- Distributions made to beneficiaries.
If a trustee refuses to provide an accounting or submits misleading financial records, this could indicate misconduct and serve as grounds for removal.
3. Mismanagement of Trust Assets
Some trustees are not intentionally dishonest but still cause harm through poor financial management. This can include:
- Failing to maintain real estate, allowing properties to lose value.
- Investing in high-risk ventures that deplete trust funds.
- Paying excessive trustee fees or incurring unnecessary legal expenses.
Negligent trustees can be removed even if they didn’t act maliciously, as trust mismanagement can result in financial losses for the beneficiaries.
4. Conflicts of Interest or Self-Dealing
A trustee must remain neutral and fair to all beneficiaries. However, conflicts of interest arise when a trustee uses their position for personal gain or favors certain beneficiaries over others. Some red flags include:
- Selling trust property to themselves or close family members at a discount.
- Loaning trust money to friends or personal business ventures.
- Making decisions that benefit them rather than all beneficiaries.
5. Trustee Incapacity or Incompetence
If a trustee becomes physically or mentally incapable of managing the trust, removal may be necessary. This includes cases where a trustee:
- Suffers from dementia or cognitive decline.
- Becomes seriously ill or otherwise unable to fulfill their duties.
- Repeatedly fails to follow the trust’s instructions.
A trustee who is no longer able to perform their role effectively should be replaced with someone who can properly administer the trust.
When to Contact a Trust Litigation Attorney
If you suspect a trustee is misusing funds, refusing to provide financial records, or failing to fulfill their duties, legal action may be necessary. At Trust Law Partners, LLP, we focus on high-stakes trust litigation and offer contingency fee arrangements, meaning you don’t pay unless we win. Call us at 626-956-3500 for a free consultation today.