Resignation And Removal Of Trustees - Trustees - Probate - CA

Section § 15640

If a trustee wants to step down after accepting the role, they can do so by following a few specified methods. First, they can resign if the trust document itself allows it. If the trust can be revoked, the trustee can resign with the consent of the person who has the power to revoke the trust.

For non-revocable trusts, all adult beneficiaries currently receiving or entitled to income or principal must agree for the trustee to resign. If a beneficiary has a conservator, that conservator can agree on behalf of the beneficiary without needing court approval. Similarly, an attorney in fact, appointed by the beneficiary through a power of attorney, can also give consent. Lastly, a trustee can petition a court to resign, and the court may approve and make arrangements to ensure the trust's assets are protected, possibly by appointing a temporary trustee or receiver.

A trustee who has accepted the trust may resign only by one of the following methods:

(a) As provided in the trust instrument.

(b) In the case of a revocable trust, with the consent of the person holding the power to revoke the trust.

(c) In the case of a trust that is not revocable, with the consent of all adult beneficiaries who are receiving or are entitled to receive income under the trust or to receive a distribution of principal if the trust were terminated at the time consent is sought. If a beneficiary has a conservator, the conservator may consent to the trustee’s resignation on behalf of the conservatee without obtaining court approval. Without limiting the power of the beneficiary to consent to the trustee’s resignation, if the beneficiary has designated an attorney in fact who has the power under the power of attorney to consent to the trustee’s resignation, the attorney in fact may consent to the resignation.

(d) Pursuant to a court order obtained on petition by the trustee under Section 17200. The court shall accept the trustee’s resignation and may make any orders necessary for the preservation of the trust property, including the appointment of a receiver or a temporary trustee.

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Section § 15641

If a trustee resigns, they and any sureties involved remain responsible for any previous actions or failures to act while they were in the role. The resignation does not change or relieve them of that liability.

The liability for acts or omissions of a resigning trustee or of the sureties on the trustee’s bond, if any, is not released or affected in any manner by the trustee’s resignation.

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Section § 15642

This law explains the reasons and methods for removing a trustee from their position managing a trust. A trustee can be removed if they breach the trust, are unfit, or fail to perform their duties. Removal can also occur if compensation is excessive or if they can't manage finances or resist fraud due to inability. Trustees can't be removed for minor errors unless proven otherwise.

There's a special rule if the trustee is related to or chosen under suspect conditions, allowing removal unless verified with an independent review that the choice was genuine and uninfluenced by fraud. If removal happens because the trustee wasn't intended by the settlor, costs fall to the trustee. On the other hand, if the removal request was made in bad faith, the requester might cover the costs. While waiting for a court's decision, a trustee might have to temporarily give up control if there's a risk of loss to the trust.

(a) A trustee may be removed in accordance with the trust instrument, by the court on its own motion, or on petition of a settlor, cotrustee, or beneficiary under Section 17200.

(b) The grounds for removal of a trustee by the court include the following:

(1) Where the trustee has committed a breach of the trust.

(2) Where the trustee is insolvent or otherwise unfit to administer the trust.

(3) Where hostility or lack of cooperation among cotrustees impairs the administration of the trust.

(4) Where the trustee fails or declines to act.

(5) Where the trustee’s compensation is excessive under the circumstances.

(6) Where the sole trustee is a person described in subdivision (a) of Section 21380, whether or not the person is the transferee of a donative transfer by the transferor, unless, based upon any evidence of the intent of the settlor and all other facts and circumstances, which shall be made known to the court, the court finds that it is consistent with the settlor’s intent that the trustee continue to serve and that this intent was not the product of fraud or undue influence. Any waiver by the settlor of this provision is against public policy and shall be void. This paragraph shall not apply to instruments that became irrevocable on or before January 1, 1994. This paragraph shall not apply if any of the following conditions are met:

(A) The settlor is related by blood or marriage to, or is a cohabitant with, any one or more of the trustees, the person who drafted or transcribed the instrument, or the person who caused the instrument to be transcribed.

(B) The instrument is reviewed by an independent attorney who (1) counsels the settlor about the nature of their intended trustee designation and (2) signs and delivers to the settlor and the designated trustee a certificate in substantially the following form:

“CERTIFICATE OF INDEPENDENT REVIEW

I, _____ (attorney’s name) _____ , have reviewed

_____ (name of instrument) _____ and have counseled my client,

_____ (name of client) _____ , fully and privately on the nature and

legal effect of the designation as trustee of _____ (name of trustee) _____

contained in that instrument. I am so disassociated from the interest of the person named as trustee as to be in a position to advise my client impartially and confidentially as to the consequences of the designation. On the basis of this counsel, I conclude that the designation of a person who would otherwise be subject to removal under paragraph (6) of subdivision (b) of Section 15642 of the Probate Code is clearly the settlor’s intent and that intent is not the product of fraud, menace, duress, or undue influence.

_____ (Name of Attorney) _____ (Date) ”

This independent review and certification may occur either before or after the instrument has been executed, and if it occurs after the date of execution, the named trustee shall not be subject to removal under this paragraph. Any attorney whose written engagement signed by the client is expressly limited to the preparation of a certificate under this subdivision, including the prior counseling, shall not be considered to otherwise represent the client.

(C) After full disclosure of the relationships of the persons involved, the instrument is approved pursuant to an order under Article 10 (commencing with Section 2580) of Chapter 6 of Part 4 of Division 4.

(7) If, as determined under Part 17 (commencing with Section 810) of Division 2, the trustee is substantially unable to manage the trust’s financial resources or is otherwise substantially unable to execute properly the duties of the office. When the trustee holds the power to revoke the trust, substantial inability to manage the trust’s financial resources or otherwise execute properly the duties of the office may not be proved solely by isolated incidents of negligence or improvidence.

(8) If the trustee is substantially unable to resist fraud or undue influence. When the trustee holds the power to revoke the trust, substantial inability to resist fraud or undue influence may not be proved solely by isolated incidents of negligence or improvidence.

(9) For other good cause.

(c) If, pursuant to paragraph (6) of subdivision (b), the court finds that the designation of the trustee was not consistent with the intent of the settlor or was the product of fraud or undue influence, the person being removed as trustee shall bear all costs of the proceeding, including reasonable attorney’s fees.

(d) If the court finds that the petition for removal of the trustee was filed in bad faith and that removal would be contrary to the settlor’s intent, the court may order that the person or persons seeking the removal of the trustee bear all or any part of the costs of the proceeding, including reasonable attorney’s fees.

(e) If it appears to the court that trust property or the interests of a beneficiary may suffer loss or injury pending a decision on a petition for removal of a trustee and any appellate review, the court may, on its own motion or on petition of a cotrustee or beneficiary, compel the trustee whose removal is sought to surrender trust property to a cotrustee or to a receiver or temporary trustee. The court may also suspend the powers of the trustee to the extent the court deems necessary.

(f) For purposes of this section, the term “related by blood or marriage” shall include persons within the seventh degree.

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Section § 15643

A trustee position becomes vacant if: the named trustee declines, can't be identified, resigns, is removed, or dies. Other reasons include: a guardian is appointed, the trustee goes bankrupt, a trust company's charter is revoked for 30 days or more, or a receiver for the trust company isn't removed within 30 days.

There is a vacancy in the office of trustee in any of the following circumstances:

(a) The person named as trustee rejects the trust.

(b) The person named as trustee cannot be identified or does not exist.

(d) The trustee dies.

(e) A conservator or guardian of the person or estate of an individual trustee is appointed.

(f) The trustee is the subject of an order for relief in bankruptcy.

(g) A trust company’s charter is revoked or powers are suspended, if the revocation or suspension is to be in effect for a period of 30 days or more.

(h) A receiver is appointed for a trust company if the appointment is not vacated within a period of 30 days.

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Section § 15644

If a trustee (the person managing a trust) steps down or is removed, they must hand over the trust's assets to the next trustee or someone the court designates. They still have to take care of those assets until they’re passed on. During this transition, the departing trustee can do what’s necessary to protect the assets and wrap up their duties.

When a vacancy has occurred in the office of trustee, the former trustee who holds property of the trust shall deliver the trust property to the successor trustee or a person appointed by the court to receive the property and remains responsible for the trust property until it is delivered. A trustee who has resigned or is removed has the powers reasonably necessary under the circumstances to preserve the trust property until it is delivered to the successor trustee and to perform actions necessary to complete the resigning or removed trustee’s administration of the trust.

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Section § 15645

If beneficiaries ask for a change in who manages their trust and the current trustee doesn't agree, the beneficiaries can take the issue to court. If the court decides to remove the current trustee and appoint a new one, it can also order that the costs and attorney's fees for making this change be paid by the old trustee or from the trust itself.

If the trustee of a trust that is not revocable has refused to transfer administration of the trust to a successor trust company on request of the beneficiaries described in subdivision (c) of Section 15640 and the court in subsequent proceedings under Section 17200 makes an order removing the existing trustee and appointing a trust company as successor trustee, the court may, in its discretion, award costs and reasonable attorney’s fees incurred by the petitioner in the proceeding to be paid by the trustee or from the trust as ordered by the court.

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