Removal of Trustees

Are there any other circumstances in which a trustee can be replaced without court intervention?

Section 36 of The Trustee Act 1925 provides that if a trustee is “dead or remains out of the United Kingdom for more than 12 months, or desires to be discharged from all of any of the trust or powers reposed in or conferred on him, or refuses or is unfit to act therein, or is incapable of acting therein, or is an infant” they may be replaced by another trustee (subject to restrictions). Some of these grounds are far more difficult to show than others, in particular that a trustee is “unfit” or “incapable”.

On what basis would the court remove a trustee?

The court’s main guide is the welfare of the beneficiaries and in instances of serious misconduct the decision to remove a trustee is likely to be straightforward. However, in all other instances it is less clear cut. For example, friction or hostility between the trustee and the beneficiaries is not, of itself, enough to have a trustee removed.

What is the process when a new trustee is appointed?

The trust assets need to be vested in the new trustee. This is the process of transferring the legal ownership. With some assets it is automatic but in some instances it may be necessary to apply for a vesting order from the court.

Section 37(1)(d) of the Trustee Act 1925 provides that in the instance of the appointment of a trustee for the whole or any part of the trust property “any assurance or thing requisite for vesting the trust property, or any part thereof, in a sole trustee, or jointly in the persons who are the trustees, shall be executed or done”.

What if the trust owes the departing trustee money?

It is well established that the departing trustee is entitled to retain assets until any liabilities properly incurred as a trustee have been paid. If there is insufficient trust money available to satisfy the amount owed to the departing trustee, he or she has an equitable lien and is able to ask the court to make an order for the sale of sufficient trust assets to discharge that amount.

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