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Trustee Removal Actions: Drafting Trust Provisions to Define and Limit Power to Remove Trustees

Recording of a 90-minute CLE webinar with Q&A

This program is included with the Strafford CLE Pass. Click for more information.
This program is included with the Strafford All-Access Pass. Click for more information.

Conducted on Wednesday, May 16, 2018

Recorded event now available

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This CLE course will provide estate planning counsel and fiduciary advisers with a thorough, practical guide to the process and challenges of removing a trustee from an irrevocable trust. The panel will discuss structuring considerations for trust drafters to outline the circumstances under which a beneficiary or co-trustee may remove a trustee, detail the role of trust protectors in exercising trustee removal powers, and describe the judicial processes under which a beneficiary may remove a trustee.

Description

Beneficiary actions to remove a trustee are among the most common challenges faced by fiduciaries. If the trust document is silent or insufficiently detailed about the circumstances and processes for removing a trustee, then the parties seeking to remove a fiduciary must navigate various state statutes and conflicting provisions of the Uniform Trust Code. Absent clear trust document guidance, trustee removal actions can deplete trust resources and produce unwanted results.

A surprising number of trust documents do not contain specific portability provisions defining when beneficiaries or co-trustees may remove a trustee from serving. In the case of corporate trustees, the grantor’s intent and the trustee’s exercise of power may not be aligned.

Beneficiaries often rely on language in the trust document that permits broad modification as grounds to replace a trustee. However, this approach conflicts with Section 706 of the UTC, which allows removal of a trustee if all qualified beneficiaries agree, removing the trustee serves the best interest of all beneficiaries, and it is not inconsistent with a material purpose of the trust.

Estate planning counsel can avoid messy trustee removal actions by specifying when the beneficiaries and co-trustees (if applicable) may remove a named trustee. Estate planners and fiduciary advisers should have a thorough grasp of the rules governing when a trustee may be removed to anticipate potential pitfalls.

Listen as our experienced panel provides a practical guide to structuring trust documents to minimize the risks of contested trustee removal actions, and to navigating the process of removing a trustee.

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Outline

  1. Statutory and UTC provisions for nonjudicial removal of a trustee
  2. Recent cases involving trustee removal actions not for cause
  3. Unique issues involved in removing corporate trustees or co-trustees
  4. Granting trust protectors power to remove trustees
  5. Structuring trust provisions to set boundaries for beneficiaries’ ability to oust trustees

Benefits

The panel will review these and other key issues:

  • Uniform Trust Code provisions on modification of trusts and how they relate to Section 706
  • Various major state provisions on trustee removal
  • Balancing protection of beneficiaries vs. empowering trustees
  • Drafting tips to define removal powers
  • Corporate and successor trustees
  • Determining circumstances for removal of a trustee for cause

Faculty

Hackard, Michael
Michael A. Hackard
Atty
Hackard Law

Mr. Hackard focuses his practice on estate, probate and trust litigation law. With over 40 years of experience...  |  Read More

Jones, Dave
Dave Jones
Atty
Hackard Law

Mr. Jones is a trial attorney who focuses his practice on estate litigation. He has experience both prosecuting and...  |  Read More

Paine, Robert
Robert H. Paine
Atty
Paine Law Group

Mr. Paine focuses his practice on trust and estate litigation, administration and planning.  He assists...  |  Read More

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