A trust is a legal device that allows you to place your assets under the care of a trustee for eventual distribution to beneficiaries you select. An irrevocable trust is a trust that you may not unilaterally revoke because the trust assets no longer legally belong to you. However, under certain circumstances it is possible to replace the trustee of an irrevocable trust. Although state laws differ somewhat on the procedure for replacing a trustee, the basic principles are the same in every state.
Examine the trust deed to find procedures for replacing the trustee. If the trust deed includes such procedures, follow them.
Contact all trust beneficiaries and obtain their consent to the amendment of the trust to remove the trustee. This may be ineffective, however, if any of the beneficiaries is a minor or if there are unnamed beneficiaries ("Paul's children", for example, if Paul doesn't yet have children).
Contact the trust grantor and obtain his consent to the replacement of the trustee, if he is still alive. Some states require a living grantor to consent to the replacement of the trustee, and some states do not.
Appoint a replacement trustee and obtain his consent to the appointment. If the trust deed names an alternate trustee, appoint the alternate trustee. If the new trustee is an individual rather than a company, he must be at least 18 years old. To avoid a potential conflict of interest, don't appoint a beneficiary as trustee.
Draft a court motion to replace the trustee that includes legal grounds for replacement. These grounds may include mismanagement of trust assets, fraud, self-dealing or mental incompetence. Depending on state law, a court may grant an order to replace the trustee on the strength of the beneficiaries' consent alone. However, your motion may have a better chance of success if you include legal grounds for replacement. Have all beneficiaries sign the motion.
When creating an irrevocable trust, consider appointing a trust company as your trustee. Trust companies offer professional trust administrators who are familiar with a trustee's ethical obligations.
Some trust deeds appoint a "trust protector." A trust protector has the authority to replace the trustee without a court order if he determines that doing so would be in the best interests of the beneficiaries.
Beneficiaries may file a lawsuit and seek civil damages from a trustee who has embezzled assets from the trust or who has lost trust assets through negligence.
- Comstock/Comstock/Getty Images