A trustee is responsible for managing the assets held in the trust on behalf of its beneficiaries. If you’re the beneficiary of a trust, you may find it necessary to remove the trustee if you believe that they’ve committed a breach of fiduciary duty or are otherwise mismanaging assets. But how much does it cost to remove a trustee? There is no single answer, as court costs and legal fees can vary based on the circumstances.
If you need to get your estate sorted, a financial advisor can help.
What Are the Duties of a Trustee?
A trustee is an individual or entity that is authorized to manage assets held in a trust. The trust creator also called the grantor, can choose who they would like to act as trustee. They can also name one or more successor trustees in case the original trustee is unable to fulfill their duties for any reason.
In terms of what a trustee does, their main role is to manage the trust according to the terms of the grantor and in accordance with the best interests of the beneficiaries. Trustees are held to a fiduciary standard, which means they must act ethically when overseeing the trust.
Typical trustee duties can include:
Following the terms of the trust and upholding the grantor’s wishes.
Making required distributions of trust assets to beneficiaries according to the terms of the trust.
Paying any necessary fees required for the maintenance of the trust or the assets held within it.
Furnishing trust beneficiaries with information about the trust when requested.
A trustee’s duties are different from an executor’s duties. An executor is someone who is charged with carrying out the terms of a will after someone passes away. It’s possible to name the same person as executor and trustee if your estate plan includes both a will and a trust.
Can a Trustee Be Removed?
Yes, it’s possible to remove a trustee from the management of a trust. However, you must have a good reason for doing so.
Unless the trust document specifies exact conditions under which beneficiaries can seek the removal of a trustee, you’ll generally need to be able to prove that a breach of fiduciary duty occurred. Examples of a breach of fiduciary duty include:
Misappropriation of trust assets for the trustee’s personal use.
Deliberately withholding assets from beneficiaries even when it goes against the terms of the trust.
Commingling of the trust’s assets with the trustee’s personal assets.
Conflicts of interest involving the trustee or third parties who have a connection to them.
Mismanagement of record-keeping or failing to furnish copies of documents to beneficiaries that they’re entitled to request.
Fraud or deception that’s intended to keep beneficiaries from taking advantage of trust assets that they’re entitled to.
You may also be able to ask a trustee to step down if you believe that age or infirmity are preventing them from carrying out their duties effectively. Or you might be able to seek removal if you believe the trustee lacks the skills to do their duties. For instance, if a trustee files for Chapter 7 bankruptcy because they’ve dug a debt hole they can’t get out of, you may not feel comfortable having them in charge of trust assets.
All of these scenarios assume that beneficiaries are trying to remove a trustee after the trust grantor has passed away. The grantor could decide to remove a trustee during their lifetime if they believe that another individual or entity may be a better fit. The trustee could also voluntarily step down if they’re unable to do their duties or did not wish to be named as a trustee to begin with.
Estate planning can get complicated quickly. Consider speaking with a fiduciary financial advisor who can help you navigate the rules.
How Much Does It Cost to Remove a Trustee?
There is no single number for how much it costs to remove a trustee from a trust. The total cost can depend on the reasons for the removal. And that can include who initiates it and whether the trustee attempts to challenge the removal.
For example, in a situation where the trustee opts to step down the cost to remove them may be nothing if there are one or more successor trustees named. The successor trustee can assume their duties without having to make any major changes to the trust document.
Now, assume that the trust grantor is still living and wishes to make a change to the trustee. They have not named any successor trustees. They may have to pay additional legal fees to their attorney to update the trust documents.
Removing a trustee can carry the highest costs when you’re seeking a court order for the removal. At that stage, you’re likely paying court fees to initiate a case as well as legal fees to one or more attorneys to argue the case in front of a judge. Depending on how long the case takes to revolve and the size of your legal team, you could easily end up paying thousands of dollars to remove a trustee.
How Do You Remove a Trustee From a Trust?
There are a few ways a trustee can be removed from a trust. As mentioned, the trustee can update the terms of the trust during their lifetime. The trustee can also opt to remove themselves. And removal is automatic if the trustee passes away.
Assuming that none of those conditions apply, court action is usually required to remove a trustee. In order to initiate a court action for trust removal, you must be an interested party. Interested parties include:
If you’re an interested party, you’d need to file a petition with the probate court to begin a proceeding for trustee removal. You’ll have an opportunity to present evidence as to why the trustee should be removed, while the trustee will have a chance to defend themselves.
Evidence can be critical to proving your claim and having a trustee removed. So, it’s important to collect as much documentation as possible showing why you believe the trustee has breached their fiduciary duty or has otherwise failed to carry out their duties.
If you have more questions, a financial advisor may be able to help.
The Bottom Line
There are many variables for how much it costs to remove a trustee. And that can affect the final number. If you’re the beneficiary of a trust, it’s important to know what rights you have. And it’s important to know when you can seek removal if you believe the trustee has breached their fiduciary duty in managing assets.
Estate Planning Tips
Consider talking to your financial advisor about whether a trust belongs in your estate plan, or how to respond if you believe that a trustee is mismanaging trust assets you stand to inherit. If you don’t a financial advisor yet finding one doesn’t have to be complicated. SmartAsset’s financial advisor matching tool makes it easy to connect with three vetted professional advisors who serve your area. It takes just a few minutes to get personalized advisor recommendations online. Get started now.
If you have a sizable estate, estate taxes on either the state or federal level could be hefty. However, you can easily plan ahead for taxes to maximize your loved ones’ inheritances. For example, you can gift portions of your estate in advance to heirs, or even set up a trust.
Keep an emergency fund on hand in case you run into unexpected expenses. An emergency fund should be liquid — in an account that isn’t at risk of significant fluctuation like the stock market. The tradeoff is that the value of liquid cash can be eroded by inflation. But a high-interest account allows you to earn compound interest. Compare savings accounts from these banks.
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