How To Remove A Trustee In New York: Legal Options & Red Flags

In this article, you will discover:

• How a trustee can be removed under New York law.
• Warning signs that a trustee may be mismanaging a trust.
• What happens to the trust’s assets after a trustee is removed.

Can A Trustee Legally Be Removed Under New York Trust And Estate Law?

Trustees have a fiduciary duty to the beneficiaries. There’s a host of different grounds or breaches of that duty for which you can remove a trustee.

Reasons For Removing A Trustee

You may want to remove a trustee if you have reason to believe they are:

• Benefiting themselves by stealing or self-dealing
• Blatantly refusing to follow the trust’s directions
• Unnecessarily delaying the distribution of assets
• Causing waste, fraud or abuse
• Not caring for or managing assets as they should

The Process For Removing A Trustee

The process is convoluted and expensive, but if a trustee isn’t doing their job correctly, beneficiaries are entitled to a formal judicial accounting.

When a trustee manages a trust appropriately, they typically provide statements that include bills paid, receipts and investment income. However, if you have a problem with the trustee, you can seek a court order requiring the trustee to provide a formalized version of that accounting.

The trustee must then submit detailed records of exactly what was done during a specified time period that hasn’t been either accounted for or waived in some legal way.

When you receive that accounting filed by the trustee, you have the opportunity to review it and file formal objections. You can then depose the trustee and gather evidence. As part of those objections, you can ask the court to remove the trustee because of their wrongdoing.

Discontent between trustees and beneficiaries is common. Sometimes it’s the trustee’s fault: the person you chose to steer the ship sinks it. Other times, there’s a mutiny by the beneficiaries, but in fact, the trustee did nothing wrong. Ultimately, the court must decide whether the trustee did something that warranted their removal.

Attorney Paul Hyl and Arthur Conte are skilled lawyers based in Lindenhurst, New York, who have helped clients like you navigate the intricacies of trust administration law. With years of experience between them, they are prepared to assist you and other beneficiaries when you want to remove a trustee because you suspect they’ve mismanaged the trust.

Still have questions? Ready to get started? Contact Hyl Conte Law, PLLC, today to schedule an initial consultation.

Delays in distributions, lack of communication or tardiness in filing tax returns are all warning signs that a trustee may be mismanaging a trust. Sudden lifestyle upgrades for the trustee, such as a new car potentially funded by the trust, may be another sign.

What Happens To The Trust And Its Assets After A Trustee Is Removed?

When a trustee is removed, either the successor listed in the trust takes over, or someone else is appointed. The new trustee must then notify all the financial institutions of their appointment, request access to all accounts and provide court orders listing them as trustee.

Typically, there’s an accounting proceeding underway to remove the trustee you suspect of wrongdoing. If the prior trustee fails to appear or file an accounting, the court removes them.

The newly-appointed successor trustee must then go to the financial institutions where the trust had accounts to obtain historical account statements in an effort to assemble an accounting that explains what the trustee did with the money and how much they stole, if any.

Can A Trust Attorney Review A Trustee’s Actions And Recommend Next Steps?

Yes, they can. Underlying this conversation is what the law says a trustee is supposed to do and what the beneficiaries are entitled to.

Having said that, nothing is definitive or black-and-white when it comes to reviewing a trustee’s actions, and there’s always a history to consider. What’s reasonable for this family and this dynamic? What did the parties agree to?

In many cases, there are gray areas where concessions are possible. For example, beneficiaries may willingly agree, in certain circumstances and for specific reasons, to receive less than 100% what they’re entitled to.

In every case, an attorney can always advise the beneficiaries or the successor trustee about what they should be doing and what should happen.

Notes From The Field: When Clients Came To An Agreement Contrary To What The Trust Instructed

I worked with a family where the trust instructed that the house be sold and the proceeds split three ways. However, because one child lived in the house, the other two agreed not to sell it.

They deeded the house out of the trust, one-third to each child. However, the two children who were not living there let the third child remain in the house, paying the bills.

The other two children were in a financial situation where they didn’t need the cash right away. Arguably, their third share in the house was still an investment because the house’s value would hopefully appreciate.

I had another case involving three children, each with a one-third interest in the family home. The child living in the house could not buy out the other two. One of them, the sister, insisted that the house be sold; the other sibling was willing to wait.

Ultimately, the child living in the house only had to buy out his sister, because she needed the money. His brother was willing to sit on his one-third interest because he didn’t need the cash at that time.

Still Have Questions? Ready To Get Started?

For more information on removing a trustee in New York, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (631) 623-2300 today.