Trusts are created for different reasons and in many different ways. Trusts are also often used to provide for disabled people in estate planning and in will writing.

However, sometimes it is necessary to remove a trustee for the trust. This can be an individual or a Trust Corporation. A trustee may be lay, which means non-professional, or professional. If they are professional, they are likely to charge for carrying out their role. They can make decisions about the assets in the trust. Unless they are also the beneficiary of the trust, they have no right to enjoy or benefit from the property or assets in the trust. This could be when:

• A trustee acts improperly;
• A trustee wants to stand down;
• A trustee loses mental capacity to carry out the role, or
• The beneficiaries would prefer someone else to carry out the role.

Check the deed

The first thing to do is always check the trust deed, which will usually set out how trustees can step down, who can appoint new trustees and how.

Trustee wants to step down

If a trustee wants to step down and is capable of doing so, it is almost always necessary for a Deed of Retirement and Appointment to be executed. The trustee should follow the process as set out in the trust deed.

Trustee doesn’t want to stand down

When a trust deed allows trustees or other people to appoint trustees, they can simply remove a trustee in writing and appoint a new trustee in their place.[1] If it doesn’t, they can direct a trustee to do this in writing if:

• all beneficiaries have mental capacity to make the decision to remove a trustee and wish to do so, and
• are over 18[2].

The trustee must then follow this instruction.

If the above does not apply, then the court can remove a trustee where it is expedient to do so[3], such as when a trustee is insolvent or otherwise unfit to act. It can also remove a trustee to protect the interests of the beneficiaries or trust assets, for example if a trustee has been dishonest or made bankrupt.

Trustee loses mental capacity to act

A trustee without capacity to carry out the role is not automatically removed or replaced, and an attorney can only act in their place in limited circumstances.

The first question to ask is whether the trustee has a beneficial interest in the trust. A professional trustee is unlikely to have a beneficial interest. If they don’t have a beneficial interest, then another trustee can simply appoint a new trustee to act in their place in writing[4].  

If there aren’t any other trustees, and all of the beneficiary have mental capacity to do so and are 18 or older, they can appoint a new trustee[5].

However, if the beneficiaries aren’t able to do this, then they will need to make a court application[6] to facilitate the removal of the trustee and appoint a new one. The type of application will depend on the circumstances of the case.

If the trustee does have a beneficial interest in the trust, for example in a family trust or in the case of the ownership of property where the people that legally own the property also live in or receive rent or other benefit from the property, the situation can be simpler.

If the incapable trustee has a lasting power of attorney (LPA) for property and financial affairs or enduring power of attorney (EPA), and the property is being sold or let, the attorney can step into the role of trustee for that transaction[7]. They can appoint a second trustee if needed. If there is no attorney, then an application must be made to court[8]. Again, which court they apply to depends on the circumstances.

Holly Mieville-Hawkins TEP, Senior Associate Solicitor and Head of Mental Capacity at Michelmores

[1] s.36(1) Trustee Act 1925

[2] s.19 Trusts of Land and Appointment of Trustees Act

[3] s.41 Trustee Act 1925

[4] s.36(1) Trustee Act 1925

[5] s.20 Trusts of Land and Appointment of Trustees Act

[6] s.41 Trustee Act 1925 or s.18(j) Mental Capacity Act 2005

[7] s.1 Trustee Delegation Act 1999

[8] s.36(9) Trustee Act 1925 or s.54 Trustee Act 1925