You know what needs to be done. A house needs to be sold, a stock portfolio needs to be split and distributed to the named beneficiaries, and a cash account needs to be divided, too. Properly handling a Trust administration is not rocket science. But it does take someone reasonably responsible to complete the task competently.
If you are a beneficiary and you know what needs to be done, why can’t you just do it? The first reason is you must be Trustee to manage a Trust. The Trustee is the person who makes the decisions and calls the shots. The Trustee has the power to sell and distribute assets; the beneficiaries do not.
And, trying to remove a Trustee is no easy task. It takes time and evidence. But there is a temporary solution that many courts will use to help properly manage a Trust estate while a removal petition is working its way through court. It’s called Trustee suspension.
With suspension, the court has the power to temporarily remove a Trustee and allow either the named successor Trustee to act, or a neutral third-party to act. By neutral third-party we are referring to either a corporate Trustee or a private, professional Trustee. Either could be a good substitute for a bad Trustee.
Many people don’t like the idea of having a corporate or professional Trustee step in because they fear the cost the Trustee will charge to do the job. But at the end of the day, it may be far cheaper to pay a professional Trustee than to suffer the losses that usually are incurred by bad Trustees. For example, the most expensive type of Trustee is usually the corporate Trustee. They charge between 1% to 2% of the Trust assets. That means if you Trust estate is worth $1 million, then the Trustee’s fee would be $10,000 to $20,000. But the trade-off is you get a much better Trust manager. Paying a corporate Trustee could be substantially cheaper than losses ten, or even hundreds, of thousands of dollars at the hands of someone incompetent to act as Trustee.
The Benefits of a Temporary Trustee
A temporary Trustee can do a lot of good in a short amount of time. For example, the temporary Trustee could step in, sell a piece of real estate, and then secure the sales proceeds until the court rules on the proper distribution. By the time the case is over, all the complicated work may be done. If all that you require is a final distribution of the Trust assets, then removal is no longer relevant or necessary. You may have just solved your problem without having to conduct a lengthy and expensive trial for Trustee removal.
So, the next time you are having a hard time with your Trustee, you may want to consider filing in court for removal, but also suspension of the Trustee. Removal is the big prize, but suspension may be the temporary measure you need to get things moving in the right direction.