Issue: How to remove a trustee from a trust that you’re a beneficiary or settler
You can. It’s easier if you are the Settler a/k/a the maker of the trust. But let’s say you are a beneficiary or contingent beneficiary, what are your options?
The general statute for trusts includes:
36C-7-706. Removal of trustee
(a) For the reasons set forth in subsection (b) of this section, the settlor of an irrevocable trust, a cotrustee of an irrevocable trust, or a beneficiary of an irrevocable trust may request the court to remove a trustee, or a trustee may be removed by the court on its own initiative.
(b)The court may remove a trustee if:
- The trustee has committed a serious breach of trust;
- Lack of cooperation among cotrustees substantially impairs the administration of the trust;
- Because of unfitness, unwillingness, or persistent failure of the trustee to administer the trust effectively, the court determines that removal of the trustee best serves the interests of the beneficiaries; or
- There has been a substantial change of circumstances, the court finds that removal of the trustee best serves the interests of all of the beneficiaries and is consistent with a material purpose of the trust, and a suitable cotrustee or successor trustee is available.
(c) Pending a final decision on a request to remove a trustee, or in lieu of or in addition to removing a trustee, the court may order appropriate relief under G.S. 36C-10-1001(b) as may be necessary to protect the trust property or the interests of the beneficiaries.
So the main challenge is unfitness or persistent failure to administer the trust effectively. If they are bankrupt that would definitely go towards unfitness. Arrested? that would be a big factor too. As for misadministration an example would be the refusal to give beneficiaries accountings. Failure to account for disbursements, poor investments.
A special proceedings action will need to be filed and served on the interested parties, followed by a hearing.
A diffferent topic is Replacement Trustees. That falls under a different statute. NCGS 36C-7-704, particularly (if non-charitable):
(c) A vacancy in a trusteeship of a noncharitable trust that is required to be filled must be filled in the following order of priority:
(1) By a person designated in the terms of the trust or appointed under the terms of the trust to act as successor trustee;
(2) By a person appointed by unanimous agreement of the qualified beneficiaries; or
(3) By a person appointed by the court.
See http://www.ncleg.net/EnactedLegislation/Statutes/PDF/BySection/Chapter_36C/GS_36C-7-704.pdf
A replacement trustee, without other provisions in the trust describing how it is to be done, will need to go before the Clerk of Court also.
Call Kirk Sanders at 336-768-1515
NC Estate Litigation Attorney