A trustee is a position of great responsibility and should not be undertaken lightly. Trustees have a large number of obligations and duties which are set out in both the trust deed and also in law. Trustees should co-operate both with their fellow trustees and also the beneficiaries and should not use their powers unreasonably and should act in accordance with the terms of the trust deed.
What are a trustees duties?
A trustee must at all times act in the best interests of the trust. They must act with honesty, integrity and in good faith. They must act in accordance with the terms of the trust deed and to do otherwise which amount to a breach of trust. e.g. a trustee is not allowed to pay money out to anyone who is not named as a beneficiary of the trust, even if they think they are doing the right thing. Trustees must also ensure that there is no conflict between their interests and those of the trust e.g. selling trust assets to themselves at a price much lower than the market value. They should also act impartially between the beneficiaries and not prefer one over the other, unless the trust deed specially permits it.
Overall, it’s a pretty long list of obligations and so it can be quite easy for a trustee to fall foul of the rules and regulations whether deliberately or not.
What if a trustee is not acting properly?
If a rogue trustee is failing in their duties then either their fellow trustees or beneficiaries of the trust can request that a trustee voluntarily steps down. As long as there are enough trustees remaining then the trustee can simply retire or else they can appoint someone else in their place before stepping down.
If the trustee refuses to step down, then the first port of call is to check the trust document as that often contains express powers to remove trustees. As long as the trust document is followed, the rogue trustee cannot really object or complain.
If the trust document is silent about removing a trustee or there is a disagreement between the other trustees and beneficiaries as to whether they should be removed, then either the other trustees or beneficiaries can to apply to court to have them removed.
On what grounds can a trustee be removed?
Just because there may be hostility between a trustee and the beneficiaries, this is not normally on its own enough to warrant them being removed. Given the decisions that trustees are expected to make, it’s quite common that not all the beneficiaries would be happy about a trustee’s decision and want them removed
There are several grounds which would justify a trustee being removed:
- Breach of trust – the trustee has failed to follow the terms of the trust document
- Death of a trustee – being a trustee is a personal role, it cannot be passed onto the deceased’ trustee’s executors
- Incapacity of a trustee – if they no longer have capacity to make decisions
- Absent trustee – if they fail to act as a trustee and fulfil their duties and obligations
- Uncooperative trustee – if they refuse to co-operate with other trustees or deal with legitimate enquiries from beneficiaries and provide them with information about the trust to which they are entitled
- Biased trustee – if a trustee is improperly favouring some beneficiaries over others
- Conflict of interest – if the trustees personal interests conflict with the interests of the trusts
- Overcharging – if a trustee is the trust excessive amounts for their services
- Failing to act properly – if a trustee makes poor investment decisions or is negligent in their actions
- Not exercising their discretion properly – the trustee ignores the settlor’s wishes completely or does not take into account other relevant information before exercising their discretion
How we can help
We act for both beneficiaries and trustees in removal applications, and also defend trustees who are facing these claims. Our team will make sure you receive advice from specialists in trust disputes, to keep disruption to the running of a trust minimal.
If you have concerns about how a trust is being managed, or you are a trustee facing complaints and criticisms from beneficiaries about your actions, get in touch with our specialist trust dispute solicitors today on 0808 164 0808. Alternatively, you can request a call back and one of our team with call you.
Breach of trust
We acted for the trustees of two trusts in connection with a dispute arising with their fellow trustee in relation to allegations of breach of trust.
We successfully negotiated a settlement with the trustee in which he agreed to retire as a trustee of both trusts, and also agreed to give up his interest in the trusts.
Conflict of interest and lack of cooperation
We acted for a professional executor and trustee in connection with a successful removal application of her co- executor and trustee, due to their lack of cooperation in dealing with the estate and their conflict of interest.
The matter was settled just before the final hearing when the trustee agreed to step down. The removal of the uncooperative executor then allowed our client to make an application to the court on behalf of the estate, for a declaration as to the proper ownership of assets which had allegedly been transferred to an offshore trust during the deceased’s lifetime.
We were successful in arguing that the assets had never left the deceased’s estate and the court made a formal declaration confirming that position. This meant that the assets could then be sold by the executors free of any personal liability.
Successful application to remove two trustees
We represented beneficiaries of a trust in connection with their successful removal application of the two trustees.
The trust’s main assets were a collection of farms, farmland and cottages. The trustees were both directors of a company that occupied some of the farm land under a tenancy agreement, meaning there were significant concerns regarding the trustees’ conflicts of interests. The court agreed to remove the trustees and an independent professional trustee was appointed in their place.
We continue to represent the beneficiaries in connection with a claim brought by the two trustees, who are now seeking to split up the trust assets.
Talk to our inheritance dispute experts
Each case will turn on its individual facts so it’s important to take legal advice promptly if you have queries about removing trustees. We act for both beneficiaries and trustees in removal applications and also defend trustees who are facing such claims. If you wish to speak with one of our inheritance dispute experts, call us free on 0808 164 0808 or request a call back and we will call you.