Spindogs
29 May 2019 | Comment | Article by Roman Kubiak TEP

How to remove a trustee

Updated 1 Sept 2020 | 3 minute read

One question we get asked a lot is “how do I remove a trustee?”. A trustee’s roles, duties and powers are generally found in:

  1. the trust deed;
  2. statute and legislation; and
  3. case law.

Likewise, there are a number of ways to remove a trustee.

Of course, the easiest way is by asking the trustee to retire and, if necessary, appoint someone in their place. Absent that, though, the following sets out how to remove a trustee:

1. The trust deed or instrument

The starting point when considering how to remove a trustee is to consider the trust deed or document.

In many cases these set out the trustees’ powers and duties as well as the person or persons who may have power to appoint, substitute and remove trustees and the basis on which they can do so.

In that case, provided the terms of the trust deed are followed, there is often little the outgoing trustee can do to object to the process.

However, if the document is silent, or limits the power to appoint or remove trustees, it may be necessary to rely on one of the other methods below.

 

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2. Legislation

2.1 Section 36 Trust Act 1925

Under section 36 of the Trustee Act 1925, trustees can be removed  if they are dead, remain out of the UK for more than a year, want to be removed, refuse to act, are unfit to act, are incapable of acting or where they are minors.

However, the only people who can remove a trustee under section 36 are:

  1. Anyone named as having power to appoint new trustees in the trust instrument; or
  2. If there is no such person, or no such person willing or able to act, then the remaining trustees or, if all other trustees have died, the personal representatives (the person or persons tasked with dealing with the estate of a deceased person) of the last trustee to die.

Of course, some grounds are easier to prove than others. For instance, it is usually easy to show that someone is dead, a minor or has been outside of the UK for more than 12 months.

However, proving that a person is incapable of acting may, depending on the circumstances, not be entirely straightforward, for instance if there are concerns about mental capacity.

Section 36(9) of the Trustee Act 1925 states that, where a trustee who lacks capacity is also a beneficiary of the trust, any application to remove them needs to be made to the Court of Protection; the court which deals with matters relating to the physical and mental welfare of people who lack the ability to do so themselves.

Determining whether or not a person is unfit to act can also prove tricky. Firstly, this can be very subjective. Secondly, in most cases the trustee who is accused of being unfit to act will almost certainly challenge that allegation.

Being ‘unfit’ depends on the circumstances of the case. Often, a person who has been made bankrupt or convicted of fraud will be unfit to act.

However, section 36 of the Trustee Act 1925 is not automatically available to beneficiaries unless they are also trustees or if they have power to remove trustees under the trust instrument.

2.2 Section 19 Trusts of Land and Appointment of Trustees Act 1996

  1. A beneficiary may be able to remove a trustee under section 19 of the Trusts of Land and Appointment of Trustees Act 1996, where the trust instrument doesn’t give anyone else the power to appoint new trustees; and
  2. The beneficiariesare all adults, of sound mind and, together, are entitled to the entire trust fund.

 

Contact us now to see if these laws can help you to remove a trustee.

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3. Court action

Failing the above, the court has the power to remove a trustee.

An application to remove a trustee can be made by a beneficiary or a trustee. When applying to remove a trustee you should try to ensure that you have a replacement or substitute trustee available.

 

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Author bio

Roman is a partner and head of the contested wills, trusts and estates team. He advises across the whole spectrum of private client litigation, with a particular focus on high value, complex and cross-border disputes including: trust disputes, breach of trust claims and applications to remove trustees; will disputes, particularly those with an international element; claims under the Inheritance (Provision for Family and Dependants) Act 1975; and claims for equitable relief under proprietary estoppel, constructive trusts and resulting trusts.

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Disclaimer: The information on the Hugh James website is for general information only and reflects the position at the date of publication. It does not constitute legal advice and should not be treated as such. If you would like to ensure the commentary reflects current legislation, case law or best practice, please contact the blog author.

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