The legal grounds and power to remove trustees are contained in various statutes, common law (case law) and potentially the trust deed itself.
Beyond possible legal challenges, trustee removal involves numerous practical considerations. Asset transfer complications, tax implications, and insurance matters must be carefully managed. The process often requires co-ordination with third parties and careful attention to registration requirements for trust assets.
The Trustee Act 1925, particularly sections 36 and 41, provides statutory authority for removal in specific circumstances. This works alongside any express provisions within the trust deed itself, which may set out specific removal procedures. The court also retains an inherent jurisdiction under equity to remove trustees where necessary for the proper administration of the trust.
Additionally, the Trusts of Land and Appointment of Trustees Act 1996 provides further mechanisms for trustee removal, particularly in relation to land.
Grounds for removal
Breach of Trust - serious and/or persistent breach of trust duties may warrant removal. The courts take a particularly serious view of breaches involving dishonesty or those that demonstrate a fundamental misunderstanding of trustee obligations.
Conflicts of Interest - typically arises when personal financial interests compete with trust interests, or when professional relationships compromise independence.
Incapacity - physical or mental incapacity rendering a trustee unable to perform their duties effectively requires careful consideration for removal. This includes situations involving mental and/or physical conditions preventing active trust administration
Bankruptcy and financial status - financial circumstances of a trustee can significantly impact their ability to serve.
Process to remove a trustee
The primary route for judicial removal of trustees is through Part 8 of the Civil Procedure Rules. The application can be made by any co-trustee, a beneficiary or any other person with sufficient interest (in practice this means someone with a clear legal or beneficial connection to the trust or its administration).
An application must be made to the High Court (Chancery Division) or County Court supported by :-
A witness statement setting out grounds for removal.
Evidence of trustee misconduct or grounds for removal.
Draft order for trustee removal and replacement.
Consent from proposed replacement trustees.
The court will consider whether removal is necessary for the welfare of the beneficiaries, the impact on trust administration, any opposition from interested parties, the suitability of proposed replacement trustees.
If removal is justified, costs usually come from the trust fund but if removal is contested and unsuccessful, the applicant may bear costs. Trustees may be personally liable for costs if misconduct is proven.
Removal of trustee based on powers in the trust deed
The power of removal in a trust deed must be exercised properly and in good faith. Check the trust deed first carefully and consider what consents are needed, possibly from all beneficiaries and existing trustees (other than the one being removed) which will depending on deed terms.
The consent must be properly documented, as specified in the trust deed, and should clearly identify the trustee being removed and any replacement. Best practice is to obtain consents before executing the removal to avoid later challenges. Risks of removal under this method include :-
Breach of the proper purposes rule - the removal power must be exercised for proper trust purposes, not for collateral reasons. Even where misconduct exists, if the real reason for removal is unrelated to trust administration, the removal may be invalid.
Procedural defects - any procedural requirements in the trust deed must be strictly followed, including notice periods and consent requirements. Even minor deviations can invalidate the removal.
A trustee facing removal can apply to court - options for a trustee can include applying for an injunction to prevent removal taking effect and/or apply to court under the court's inherent jurisdiction to determine whether the power was exercised properly and claiming breach of trust against those exercising the removal power if it was exercised improperly
After removal it will be necessary to execute a deed of removal and appointment, register changes with relevant asset holders, execute vesting declarations under section 40 of the Trustee Act 1925, possibly update land registry entries for trust property, transfer investment holdings to continuing/new trustees and notify relevant third parties (banks, investment managers, HMRC).
Negotiated removal
Under English trust law, even where a trustee initially resists removal, a negotiated outcome is possible to avoid court proceedings. The negotiations will typically involve issues around trustee indemnities, release of liabilities and proper handover of trust property. Once agreement is reached, the removal can be documented by deed of removal and retirement, though care must be taken to ensure all necessary consents are properly obtained and the trust deed's requirements are followed.
Unhappy with a trustee's decisions? What are your options?
Disagreements involving family trusts frequently arise because beneficiaries want money released or trust assets used in ways that the trustees do not agree with. A beneficiary might request funds to purchase a home, meet living expenses, pay debts or support their children. There may also be disagreements about selling a property, investments or how much should be distributed to different family members.
This is particularly common with long-term discretionary trusts, where trustees may be expected to preserve assets for many years and balance the interests of current and future beneficiaries. A trustee may have legitimate reasons for refusing a request, even where the beneficiary feels the decision is unfair.
An unpopular decision is not necessarily an improper one, and beneficiaries do not automatically have the right to remove a trustee because they disagree with them. However, trustees must exercise their powers properly, consider relevant circumstances, act in accordance with the trust's purposes and manage conflicts of interest.
Is removing the trustee the right solution?
Before seeking removal, it is important to distinguish between dissatisfaction with a particular decision and a trustee who is no longer suitable to administer the trust. Courts are not generally there to substitute their own commercial or financial preferences for decisions properly made by trustees. Removal is principally concerned with protecting the trust and its beneficiaries, not resolving every disagreement. In some cases, challenging a particular decision, seeking information or negotiating a change in how the trust is administered may be more appropriate.
How experienced legal advice can help
Our contentious trusts solicitors can establish whether a trustee's decision is legally open to challenge and, importantly, whether there is a more practical way to resolve the disagreement.
Understand the trustee's powers. We examine the trust deed, any letter of wishes and the circumstances of the disputed decision to establish what the trustee can and cannot do.
Assess whether the decision was properly made. We consider whether relevant circumstances were taken into account, whether the trustee has acted impartially and whether there are grounds to question the exercise of discretion.
Seek reconsideration. We can present the beneficiary's circumstances and supporting evidence, request appropriate information and seek a fresh decision without immediately threatening proceedings.
Negotiate alternatives. Depending on the trust's terms, options might include a smaller distribution, staged payments, a loan, funding for a particular purpose or an agreement about future decisions.
Consider replacement or court intervention. Where there is serious misconduct, persistent failure to perform trustee duties, an unmanageable conflict or another proper legal basis, we advise on removal and other available remedies.
The objective is to resolve the underlying problem, which may not require removing the trustee at all. Experienced advice can help beneficiaries understand their realistic rights, put forward a stronger case for a particular decision and avoid expensive litigation that may ultimately be unsuccessful.
For specialist advice, contact us or see our Trust Dispute Solicitors service page.
