The office of trustee demands the utmost integrity from its incumbent. Beneficiaries of a trust must be confident that the appointed trustee is administering the assets properly and in good faith for their benefit. On occasion the relationship of trust and confidence breaks down and beneficiaries will wish to replace a trustee with someone they view as a more suitable candidate.

Modern trust deeds can confer an express power to remove and replace a trustee upon an individual. Such power must not be exercised for the benefit of the person who holds the power but for the benefit of the beneficiaries of the trust; nor must it be exercised maliciously, capriciously or in bad faith. It is unusual for a beneficiary to hold the power of removal of a trustee. Appointing yourself as trustee particularly if you are a beneficiary, is likely to be regarded by the court as an improper exercise of the power. Alternatively, trust deeds can state that the statutory power of removal and replacement of a trustee should apply, meaning that the power will remain in the hands of a new or continuing trustee.

Not every error or mishandling of the relationship with its beneficiaries will mean that a trustee is at risk of removal but if there is evidence of any of the following, a trustee will be at risk:

1 If guilty of dishonest conduct.

2 If its conduct endangers the trust property;

3 By failing to account properly to the beneficiaries;

4 If it becomes insolvent;

5 If he or she becomes incapacitated;

Accordingly, a personality clash or a falling-out between trustees or between trustee and beneficiaries or a simple misunderstanding between them is unlikely to amount to sufficient grounds for removal, unless there is a threat to the trust assets as a consequence. An individual can "cling on" to office by refusing to step down in the face of what he regards as unwarranted criticism from his beneficiaries and if an application to Court is made, the trustee may be removed, for no other reason than to restore calm and order to the administration of the trust. On the other hand, the Court may view the beneficiaries' complaint as unfounded and refuse the application, particularly if the beneficiaries are not unanimous in their criticism of the trustee and it is open to the Court to order the costs to be paid by the complaining beneficiaries.

The procedure for applying to Court for the removal of trustees and personal representatives is set out in Personal Representatives and Applications for their Removal.

This note is intended to provide a general overview only and is not intended to be comprehensive nor to provide specific legal advice and should not be acted upon or relied upon. For further advice tailored to your specific circumstances, please contact any member of the Trusts & Fiduciary Disputes team.
July 2007