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Trustee Removal Lawsuits, Litigation

If you are unhappy with a trustee, can you remove the trustee? The answer to that question is “yes,” but there needs to be a specific legal basis for it. You will not prevail on a trustee removal case in court simply because you do not like the trustee(s). 

Section 456.7-706, RSMo governs trustee removal in Missouri. A trustee removal lawsuit may be initiated by the settlor (i.e., trust creator), co-trustee, qualified beneficiary or even the Court itself. There are three main avenues by which a trustee may be removed: (1) when the trustee commits a serious breach of trust, (2) when because of unfitness, unwillingness, or persistent failure of the trustee to administer the trust effectively, removal serves the best interests of the beneficiaries, or (3) the trustee has substantially and materially reduced the level of services to the trust and has failed to take remedial action within ninety days after a demand to take such remedial action is made. Separately, moreover, the Court may remove co-trustees when there is a lack of cooperation that substantially impairs the administration of the trust. The vast majority of trustee removal cases are based on an alleged serious breach of trust by the trustee. 

Remember that these are the statutory bases for trustee removal in Missouri (and many other states). Specific attention needs to be given to whether there are any terms in the trust itself discussing trustee removal. For example, it is not uncommon for trusts to contain provisions whereby a majority or all of the beneficiaries may remove a trustee upon a simple written demand. If such provisions exist, it will likely be more efficient and effective to proceed that way to avoid the costs and uncertainty of litigation. 

Based on experience, trustee removal litigation is time consuming and costly from both a plaintiff’s and defendant’s perspective. Accordingly, it often occurs that a trustee simply resigns when it becomes apparent that a lawsuit has been filed or will be filed. Nonetheless, several practical concerns need to be considered, including the costs of the action relative to the desired outcomes. What’s more, trustees are often entitled to use trust assets in defending against a trustee removal claim, particularly if the trustee is successful in the defense. There also needs to be a clear idea of what happens if the trustee removal is successful. Who is next in line to serve as trustee? If the trust does not specify a successor trustee, or set forth a procedure to select a successor trustee, a court may fill the vacancy with a trustee of its choosing. 

Contact with questions about trust litigation, breach of trust actions, and trustee removal lawsuits.