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How Does a California Trustee Resign from Trust Duties?

How does a trustee resign? That depends on the terms stated in the trust document. Most trusts will have a provision that describes how a Trustee may resign from acting as Trustee. In most cases, the Trustee will give written notice of their resignation to the Trust beneficiaries and to the successor Trustees. Whatever the Trust terms prescribe, the Trustee must follow. At times, the written notice is only given to the beneficiaries, and at other times only the successor Trustee must be notified. Of course, it’s always a good idea for a Trustee to notify the Trust beneficiaries in writing of a resignation regardless of whether the Trust terms require it.

 

When The Trust Does Not have Resignation Provision

Some Trusts, however, do not have a resignation provision. In that case, the trustee must follow the California Probate Code.

Under Probate Code section 15640, the Trustee of a Trust that does not have a resignation provision may resign either by:

  1. With the consent of the person holding the power to revoke the Trust (this assumes it is a revocable Trust);
  2. With the consent of all adult beneficiaries of the Trust (this assumes the Trust is irrevocable); or
  3. Pursuant to court order.

Resignation is typically done by giving written notice to the beneficiaries and to the successor Trustee. The successor Trustee should receive the resignation so that he or she knows that it’s their turn to manage the Trust estate.

What To Do If There Is Not a Successor Trustee

What if the Trust does not name a successor Trustee? In that case, you may have a problem. Some Trust documents will have a procedure for naming a successor Trustee when one is not specified in the Trust document. Some Trusts do not. When a Trust fails to provide a procedure for selecting a successor, then you must go to court and ask the court to appoint a successor Trustee for you.

When a Trustee resigns, they must still act in the best interests of the Trust and the Trust beneficiaries. That means the Trust assets must be managed prudently while a new Trustee is selected. Further, the Trustee is required to provide an accounting to the Trust beneficiaries upon resignation. A Trustee cannot simply walk away from the Trust. They have a duty to hand over the management to a new Trustee in a way that is reasonable, and still safeguards the Trust assets.

In short, resigning as a Trustee can be a lot of work. The Trustee must follow the rules, resign appropriately, and hand the Trust administration off to the next Trustee in line (or the next Trustee appointed by the court).