The relevant New York statute that applies if you want to change trustees depends on the type of trustee. If the trustee is from a testamentary trust, the Surrogate’s Court Procedure Act (SCPA) §§ 711 and 719 apply. For lifetime and other trusts where the trustee was not appointed by the Surrogate’s Court, Estates, Powers, and Trusts Law §§ 7-1.9 and 7-2.6 apply.
When attempting to change a trustee, it’s important to first determine whether the trust is a revocable trust or an irrevocable trust, your interest in the trust, and whether the trust required letters of trusteeship to assume office.
Changing a trustee in a revocable trust
A revocable trust is a trust that can be changed at any time by the grantor. The grantor is the person who established the trust. Most trusts created are revocable, which allows the grantor control over his own property.
Usually, the grantor, the trustee, and the beneficiary are one person. In case the trustee is a different person from the grantor, the grantor may at any time change the trustee. A revocable trust will include provisions giving the grantor the power to change the trustee and the beneficiary. This is what makes the trust revocable.
In a revocable trust, only the grantor can change the trustee. A beneficiary or co-trustee does not have the power to change the trustee. For this reason, as previously mentioned, your power to change the trustee depends on your interest in the trust. In a revocable trust, only the grantor’s interest can change the trustee.
For example, a testamentary trust (a trust created in a will) is revocable for as long as the testator is still alive. While the testator is alive, the testator can change the trustee or beneficiary in a testamentary trust by executing another will.
Once the testator dies, the testamentary trust becomes irrevocable. In irrevocable trusts, changing the trustee will depend on a number of factors. There are many irrevocable trusts where the grantor is still alive, but the provisions in the trust prohibit the grantor from changing the trustee or the beneficiary. This is what makes the trust irrevocable.
Changing a trustee in an irrevocable trust
In an irrevocable trust, if you want to remove the trustee, you must first review the trust document to see if there are provisions providing for the removal of the trustee. If there are, these provisions have to be followed. If the trust document is silent as to removal, identify the type of trustee so you can determine which New York statute applies in the change of trustees.
Changing a trustee through the Surrogate’s Court
If the trustee is a trustee of a testamentary trust, the trustee needed the issuance of Letters of Trusteeship by the Surrogate’s Court in order to assume office. In this case, SCPA §§ 711 and 719 apply. SCPA § 711 allows the change of trustees by petition of an interested person. On the other hand, SCPA § 719 provides for the change of trustees even without a petition or hearing.
SCPA § 711
Under SCPA § 711, a co-trustee, creditor, interested person, or surety on a bond of the trustee may file a petition, praying that the trustee be removed and changed, for the following reasons:
- The trustee was ineligible or disqualified to be a fiduciary when letters were issued
- Wasting or improperly applying trust assets, or committing other misconduct related to the trust or dishonesty, drunkenness, improvidence or want of understanding
- Willful refusal without good cause to obey a lawful court order
- Grant of letters was obtained through false facts
- Grant of letters was based on a contingent event that has happened
- Trustee’s removal of trust property from the state without prior court approval
- Trustee’s substance abuse, dishonesty, improvidence, want of understanding, or unfit for office
- Violation of trust, insolvency, or any other reason that would make him unsuitable to execute the trust
- When the Supreme Court would have cause to remove the trustee
- Failure to account
SCPA § 719
Under SCPA § 719, the court can remove a trustee, even without a petition of an interested person or without a hearing on the following grounds:
- When the trustee fails to appear or fails to account without reason despite return of process
- When the trustee absconds or conceals himself
- When the trustee neglects or refuses to obey a court order
- When the will or document creating the trust and nominating the trustee is invalid or ineffective
- Felony conviction or judicial declaration of incompetence
- Commingling of trust funds with own or third party’s personal funds
- In the case of ancillary letters, when original letters in the domiciliary jurisdiction have been revoked
- Any of the situations provided in SCPA § 711
Changing a trustee through the Civil Court
Most trustees do not require letters of trusteeship to assume office. Usually, letters of trusteeship are issued by the Surrogate’s Court to trustees of testamentary trusts. The majority of trusts, however, are inter vivos trusts, created by the grantor during his lifetime for the benefit of another person (the beneficiary). To assume office, the trustee only requires the signed trust document and the transfer of trust property to the trustee. The relevant New York statutes to be applied to change the trustees are EPTL §§ 7-1.9 and 7-2.6
EPTL § 7-1.9
Under EPTL § 7-1.9, an irrevocable trust may be revoked or amended in whole or in part with the written and acknowledged consent of all the beneficiaries without need of going through the court. This amendment may include changing the trustee. Thus, in an irrevocable trust, to change the trustee, you need all the beneficiaries to unanimously consent to the change of trustee.
EPTL § 7-2.6
If you are not able to get the unanimous consent of all the beneficiaries, an interested person can change the trustee by filing a petition with the Supreme Court under EPTL § 7-2.6. The grounds to remove a trustee under this section are:
- Trustee’s violation or threat to violate the trust;
- Trustee’s insolvency or imminent insolvency;
- Trustee’s arrest;
- Trustee is unsuitable to execute the trust.
As you can see, the last ground is a catch-all phrase that can be used to remove a trustee that does not fall under the previous three grounds. With this catch-all phrase, you may use the grounds under SCPA § 711 and 719 as grounds by analogy, even if SCPA is only designed to apply to Surrogate’s Court cases.
As explained above, the New York statute to be applied in changing trustees depends on a number of factors: the type of trust, the interest of the person, and whether letters of trusteeship were issued by the Surrogate’s Court. This will determine where to file your petition to change the trustee. Because of the complex laws that govern the removal and change of a trustee, it is important to get legal advice from a qualified lawyer with expertise in trusts.
Changing a trustee is a complex process that requires you to prove your ground. Only a qualified and experienced trusts lawyer can help guide you through the process. Should you need assistance, we at the Law Offices of Albert Goodwin are here for you. We have offices in New York, NY, Brooklyn, NY and Queens, NY. You can call us at 718-509-9774 or send us an email at firstname.lastname@example.org.