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Trustee removal: Common reasons and legal steps

On Behalf of | Oct 7, 2024 | commercial litigation

When a business establishes a trust, it typically names a trustee to manage the assets. This trustee has the responsibility to act in the best interests of the beneficiaries. 

However, situations can arise where beneficiaries feel that the trustee is not performing their duties properly. In Texas, there are legal steps to remove a trustee if necessary. 

Common reasons for trustee removal

Several issues can lead to the removal of a trustee. One of the most common reasons is a breach of fiduciary duty. This occurs when a trustee acts against the trust’s best interests or fails to follow the trust’s terms. For example, if the trustee mismanages the assets or uses them for personal gain, it would be a violation of their responsibilities.

Another reason for trustee removal is conflict of interest. If the trustee has personal relationships or financial interests that interfere with their ability to make fair decisions, this can lead to serious problems. Additionally, a trustee who is unable to fulfill duties due to illness, old age, or incompetence may be subject to removal.

Lastly, it is possible to remove a trustee who refuses to provide necessary information to the beneficiaries. Trustees must keep beneficiaries informed about the trust’s activities. A lack of communication can create mistrust and be grounds for dismissal from the assignment.

Legal steps for removing a trustee

Removing a trustee in Texas requires going through a specific legal process. First, the beneficiaries must file a petition, explaining why the court should remove the trustee. The court then reviews the case and examines the evidence at a hearing. This process may include reviewing financial records and the trustee’s actions.

Of course, trustees who face removal can fight the process by defending their actions and proving they fulfilled their duties properly. Beneficiaries must be ready to counter these claims during the hearing

If the court finds that the trustee has violated their duties or is no longer able to manage the trust effectively, it can remove the trustee and appoint a new one. The court’s decision depends on the trust’s best interests and the well-being of the beneficiaries.

A trust cannot serve its purpose if a trustee is unwilling or incapable of handling their assigned duties. Knowing when and how to remove a trustee ensures that the trust remains protected and serves its intended purpose.