How long does it take to remove a trustee completely from a trust? About a year. But only if they deserve it.
Can you prevent a trustee from acting even before they get removed? Yes, you can can get an order from the court restraining the trustee from acting and suspending their powers until the matter of their removal is decided.
Before we as how long does it take to remove a trustee, we have to figure out if even it’s possible to remove the trustee in your case. A trustee was nominated by the will of the person who died, so we can presume that the person who died trusted the nominated trustee to carry out their duties. The trustee was probably confirmed by the court, meaning that the court looked at the trustee’s candidacy and approved them to act as the trustee. Once they are appointed by the court, you can only remove a trustee if they violate their fiduciary duty to the trust and its beneficiaries.
As person with the legal power to manage someone else’s property, a trustee is a fiduciary. This is a special role that comes with many responsibilities. The trustee is responsible for proper management of the trust, and does not have the right to get a benefit at the expense of the trust’s beneficiaries. When trustees don’t perform their duties, the court can remove them.
Acting a trustee is a big responsibility, and one needs to be careful not to do the wrong thing. A court can remove a trustee on the grounds of misconduct when they
- Steal from the trust
- Fail to follow the terms of the trust
- Mismanage trust assets including bank accounts, stock, bonds, retirement accounts, pensions
- Fail to take inventory of assets, including personal and real property
- Be negligent or careless in investing assets
- Sell personal and real property below market price
- Fail or refuse to distribute assets
- Fail to pay creditors
- Fail to pay funeral expenses
- Fail to file a trust tax return if required, fail to pay trust taxes and back income taxes
- Fail to notify the court of change of address
- Mismanage a trust business or sell it below market value, whether to himself or to someone else
- Take over the trust business for the trustee’s own gain
- Commingle trust funds with his own funds
- Keep trust funds in a personal account (you need a trust account)
- Ignore beneficiaries
- Fail to communicate with beneficiaries
- Keep beneficiaries misinformed about trust and financial matters
- Favor one beneficiary over another
- Fail to wind up and settle a trust
- Refuse to distribute assets to the beneficiaries
In a trustee removal proceeding, the beneficiaries ask the court to appoint a different trustee. If the court finds fault with the trustee, the court can remove a trustee and possibly forced to make restitution for improper gains. If the court removes the trustee, the court may replace them with the person who applied for their removal, a closer relative, or someone from the court’s list of trustee who offer their services to the public. How long will that take? Depends on the facts involved.
A trustee is named by a settlor (the person who made the trust) at the time a trust is made. The trustee cannot fail to carry out the wishes and intent of the settlor and cannot act in bad faith, fail to represent the best interests of the beneficiaries at all times during the existence of the trust and fail to follow the terms of the trust. And most importantly, the trustee cannot steal from the trust. If a trustee fails to follow those rules, the court can remove the trustee.
There are all sorts of other contractual or legal matters that may require a trustee’s attention. For instance, if the testator owned commercial property and had tenants, the trustee may have to collect rents, work with a property management company or hire one depending on the size of the building and the number of tenants. A court can remove a trustee for failing to properly value assets and complete contractual obligation.
How long does it take to remove a trustee for stealing from the trust? About a year, but you can get an order temporarily suspending them. There are significant penalties for stealing from a trust. The court can discharge the trustee and replace them with someone else, force them to return the money and take away their commissions. There can also be criminal a penalty, but most trust theft allegations do not escalate to criminal prosecution.
How long does it take to remove a trustee for taking more funds than the trustee is entitled to? About a year and a half, but you can get an order temporarily suspending them.It can be tempting for a trustee to take some extra cookies from the cookie jar. You have access to trust funds and the power to take some funds out. You don’t see anyone looking over your shoulder. But that sense of safety is false. Banks and courts have systems in place to detect fraud. Beneficiaries can get suspicious and hire a trust attorney or report the suspect to the police and hire a trust attorney to get the inheritance that they are entitled to.
How long does it take to remove a trustee for self-dealing? About a year and a half, but you can get an order temporarily suspending them.The trustee cannot transfer trust property to himself because the property belongs to someone else unless he pays the full price for it. As explained above, doing so can be interpreted as stealing and can lead to an array of legal woes. A smart trustee would want to avoid transferring trust assets to himself, even if paying fair and market value. If beneficiaries are getting more money than they would have, if not for the trustee buying them out, the trustee should explain it to the beneficiaries. For example, the trustee can explain the savings on transaction costs, such as not having to pay a broker. There must be a feeling that the trustee fulfilled his responsibilities to the beneficiaries.
How long does it take to remove a trustee for commingling funds? About a year, but you can get an order temporarily suspending them.The trustee should place all trust funds into a trust account and not into his personal account. New York Consolidated Laws, Trusts, Powers and Trusts Law – EPT § 11-1.6 states that “Every fiduciary shall keep property received as fiduciary separate from his individual property. He cannot invest or deposit such property with any corporation or other person doing business under the banking law, or with any other person or institution, in his own name, but all transactions by him affecting such property shall be in his name as fiduciary.” Surrogate’s Court Procedure Act – SCP § 719 states that the court can take away a person’s power to manage the trust “where he mingles the funds of the trust with his own or deposits them with any person, association or corporation authorized to do business under the banking law in an account other than as fiduciary.”
How long does it take to remove a trustee for using trust funds for personal expenses? About a year, but you can get an order temporarily suspending them. The trustee can only use trust funds to pay the legitimate expenses of the trust, taxes and legal fees.
A trustee is held a higher standard of behavior and is expected to act in an honest, fair and ethical manner. A trustee cannot breach their fiduciary duty. They could be held legally liable for any losses suffered by the trust or beneficiaries. A court can remove a trustee for breach of fiduciary duty and can be subject to restitution of any financial losses to the trust and beneficiaries, as well as face criminal charges if the trustee committed any crimes such as embezzlement of trust assets.
A court can remove a trustee for a number of reasons, facing hassle, stress and legal fees in the process. Because of that, some family members decide they do not want to take on the job and end up resigning and hiring an attorney or another personal representative to replace them and administer the trust.
At the Law Offices of Albert Goodwin, we handled many trustee removal proceedings. You can call us at (212) 233-1233 and we can discuss how long it would take to remove a trustee in your specific case, if possible.