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:
- Anyone named as having power to appoint new trustees in the trust instrument; or
- 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
- 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
- The beneficiaries are all adults, of sound mind and, together, are entitled to the entire trust fund.
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.