So you want to get rid of your Trustee? Quite a few beneficiaries feel that way, especially when a Trustee fails to treat the beneficiaries fairly, fails to follow the Trust terms, and fails to properly invest Trust assets. It can be a challenge to remove a Trustee, in part because Court’s are at times reluctant to replace a Trustee with one of the Trust beneficiaries—especially where the beneficiaries disagree on who should act. The fear stems, in part, from the desire to have a neutral party step in who can clean up the mess without creating bigger problems and more litigation.
The solution is in having a neutral-third party ready to act in the Trustees’ place. And the best neutral parties can often be found in a private, professional Trustee (or professional fiduciary as they are known).
You may know that many banks and Trust companies offer Trustee services where they will act as Trustee for a fee. The problem is that the fee can be a bit hefty (2 to 3 percent of the Trust assets), plus many corporate Trustees require a high amount of assets before they will agree to act. More than that, many corporate Trustees refuse to act over real estate and stay clear of any contested matters.
Private fiduciaries, by contrast, are often agreeable to acting over real estate and to getting involved in contested matters. This is a real plus when you are in the middle of a contested Trust case and need a neutral third-party to act. And most neutral, private fiduciaries will charge an hourly fee that is less than a percentage of the estate assets charged by corporate Trustees. Some even use a different fee schedule based on the type of work being done so you do not have to pay the same rate for everything they are doing as Trustee. In short, private Trustees provide a great alternative to corporate Trustees when a neutral is required.
Beware, however, that there are good private Trustees and bad ones too. Just like anything else, you need to interview a few to make sure your pick someone you can work with and who will do the right thing once in office.
The best part about private Trustees is that court’s highly favor their appointment. If you have a case where siblings are fighting, suggesting the appointment of a neutral Trustee is a pretty easy sell to the court. Especially if you tell the court that a neutral party will decrease the chances of future litigation. And if you have a bad Trustee in office, appointing a good neutral is a great way to go rather than you acting as Trustee because then the neutral undertakes the duties and responsibilities of the office rather than you. If you are in a fight with your siblings, the last thing you want is to undertake legal duties and responsibilities to your siblings that they can then use against you (validly or not).
Private, professional fiduciaries can serve a great purpose in your litigated Trust matter. Just find the right one for you, and then off you go.