Firing a Trustee – Difficult to Do?

The following is from Fran Hawthorne, Breaking Up Is Hard to Do, NYTimes.com, March 18, 2008:

As a family trust moves into its second and third generations, it is almost inevitable that someone will be unhappy with a trustee.***

Dissatisfaction with trustees — particularly corporate trustees rather than individuals — has been growing over the last five years, those experts say. Most complaints center on investment performance, mostly because beneficiaries have become more financially sophisticated and more types of investments are now available.***

Experts disagree on how difficult it is to win a trustee-dumping case. Mr. Dardaman said that evidence like a log showing a long spate of unreturned phone calls or proof of poor investment returns could convince a judge. But Mr. Kahn said such complaints were not enough. “You have to do something egregious before the court will fire you as a trustee,” he said, like putting trust assets into an investment where the trustee has a personal interest. “The court may simply say you owe some money back to the trust.”***

Special thanks to Joel Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.