Removal of Trustee
Gayle B. Wilhelm has recently published his article, Changing Horses: Some Thoughts About Removal of Trustees, 18 Quinnipiac Prob. L.J. 273 (2005).
In the introduction his article, Mr. Wilhelm states:
In 2001, the Connecticut Legislature reacted to a number of complaints from trust beneficiaries following the acquisition of their trusts by large banks or trust companies through mergers with smaller, more localized institutions. The Legislature hastily enacted protective legislation authorizing those beneficiaries to remove their new corporate trustee without cause and replace it with another qualified trustee more agreeable to them. Unfortunately, while it is clear from the legislative history and public comments that the focus of the Legislature was almost entirely on corporate mergers, the new all encompassing statute permits the removal of individual trustees, including those selected by the person creating the trust. Moreover, while the Legislature chose to enact, verbatim, the removal provision contained in the Uniform Trust Code, it failed to include in the new Connecticut statute definitional and other provisions of the Uniform Trust Code which are crucial to its interpretation and application. In this Article, the author will examine the history of trustee removal and some of the issues arising from Connecticut’s adoption of C.G.S. 45a-242(a)(4).
He concludes by explaining:
While the subject of removing conglomerate corporate fiduciaries has received a great deal of attention as a result of bank mergers and the disappearance of “the local bank in whom a grantor had reposed trust and confidence,” in general the arguments both in favor and against removal of trustees tend to be predicated upon the notion that one is testing the rights of the beneficiaries against the rights of the trustee. In this limited context it is not difficult to understand why there is both public and legislative furor when it appears that the objects of the grantor’s affection are being given short shrift in favor of the “Big Banks.” The fallacy of this analysis needs to be more widely understood. Fiduciaries have virtually no “rights” arising from their position of trust, other than to be reasonably compensated, and in a balancing of rights the beneficiaries must ordinarily win. However, in the majority of cases, and particularly in the case of individual rather than corporate fiduciaries, it is not a test of the fiduciary’s rights that should control but rather a test of the grantor’s rights. In the absence of cause for removal, to allow a beneficiary to choose his or her own trustee in lieu of the trustee chosen by the grantor is inevitably to vitiate the concept of trusts itself and invite a form of trust management neither chosen nor approved by the grantor. Inviting the courts to intervene and do the choosing is, at best, a method of insuring that the beneficiary does not choose poorly, but it does nothing to carry out the grantor’s intent or protect the grantor’s right to choose who will manage his or her property and determine how and when and in what amount trust distributions will be made to the beneficiaries. The purpose of a trust agreement is to allow the grantor to retain, both de facto and de jure, at least indirect control over the beneficiaries’ enjoyment of what was the grantor’s property through the trustee’s obligation to carry out the grantor’s intent and the ability of the courts to enforce that intent. It is these “rights” of the grantor which must be balanced against the rights which society must give to the beneficiaries in order to protect them against incompetent, negligent or dishonest trustees. There should be no question but that it is the right of the grantor to impose limitations on the beneficiary’s enjoyment of the trust property – including nullifying the grantor’s choice of trustee – which must be given first priority, for otherwise few if any trusts would be created.