- Before asking a court to remove a trustee, a beneficiary can often use tools like requiring accounts, which a trustee must pass annually on notice from a beneficiary.
- Trustees must invest with the care, skill, diligence and judgment of a prudent investor, which gives beneficiaries a standard to measure conduct against.
- Even a trustee who breaches the trust may be excused by the court if they acted honestly and reasonably and ought fairly to be excused.
If you are a beneficiary and you think a trustee is slow, secretive or careless, it is natural to wonder whether they can simply be replaced. The answer depends on the trust document, the facts and what a court is willing to order.
This article explains the steps that usually come first in British Columbia, the Trustee Act tools that put pressure on a trustee, and why removal or replacement is a question to take to a lawyer early.
This article covers the law of British Columbia.
Start by naming the problem
Courts look at what a trustee actually did or failed to do, so it helps to be specific. Frustration alone is rarely enough. Typical concerns include no information being shared, delay in distributing, risky or neglected investments, or the trustee mixing their own affairs with the trust.
The exact grounds for removal, who may apply and what the court can order depend on the facts and the trust document. A lawyer can confirm how they apply to you, so this article does not try to list them.
Tools short of removal
Several parts of the Trustee Act give beneficiaries leverage without going straight to a removal application. Matching the concern to the tool can resolve a dispute sooner.
| Your concern | Related Trustee Act point |
|---|---|
| No information about what the trustee has done | On notice from a beneficiary, a trustee must pass accounts annually |
| Estate seems stalled | Executors and administrators must obtain a court order passing first accounts within 2 years of the grant, unless all beneficiaries approve in writing or the court directs otherwise |
| Poor investing | A trustee must use the care, skill, diligence and judgment of a prudent investor |
| Trustee pay seems too high | A trustee may receive a fair and reasonable allowance not exceeding 5% of the gross aggregate value of the estate, unless the trust instrument sets it |
The two-year requirement applies to executors, administrators, testamentary trustees and judicial trustees. Other trustees may pass first accounts at any time.
A trustee may also apply for an annual care and management fee not exceeding 0.4% of the average market value of the assets. As with the allowance, these rules do not apply where the trust instrument sets the trustee's allowance.
What a trustee can say in response
Trustees have defences. A trustee is not liable for an investment loss if the conduct conformed to a prudent plan or strategy with a reasonable assessment of risk and return. A trustee who properly delegated investment authority is not liable for the agent's decisions.
Delegation has limits. The trustee must set the investment objectives and act prudently in choosing the agent, setting terms, communicating objectives and monitoring performance. Delegation is not allowed where the trust requires the trustee to act personally.
The court may also relieve a trustee from liability for breach of trust if the trustee acted honestly and reasonably and ought fairly to be excused. Expect a trustee to rely on these points if you challenge their conduct.
Replacement, resignation and who steps in
A trustee who no longer wants the role, or a family that agrees on a change, may be able to arrange a resignation and a replacement. Whether that can happen privately or needs a court order depends on what the trust document says and who the beneficiaries are, for example whether any are minors or not yet born.
Where an executor or administrator is involved, the steps for a change depend on your situation. A lawyer can explain the steps for your estate, including how a replacement takes over, and what happens to accounts for the period the outgoing trustee was in charge.
Because the answer turns on the wording of the trust and the circumstances of the beneficiaries, it is worth confirming your options with a lawyer before you raise a change with the trustee or other family members.
What to do next
- Get a copy of the will or trust document and read who may appoint or replace trustees.
- Write down your specific concerns with dates, and keep related emails and letters.
- Ask the trustee in writing for information and for accounts.
- Check the date of the grant or appointment to see where the 2-year accounts timeline stands.
- Speak with a lawyer before filing anything, since court applications carry costs and risks.
Frequently asked questions
Can I force a trustee to show me the accounts?
On notice from a beneficiary, a trustee must pass accounts annually. Executors and administrators must also generally obtain a court order passing their first accounts within 2 years of the grant, unless all beneficiaries approve in writing or the court directs otherwise.
If the trustee made a mistake, will they be removed?
Not necessarily. Whether removal is appropriate depends on the facts and the trust document, and is worth discussing with a lawyer. Separately, a court may relieve a trustee from liability for breach of trust if the trustee acted honestly and reasonably and ought fairly to be excused.
Can the trustee just resign?
Sometimes, but how it works depends on the trust document and who the beneficiaries are. Whether a court needs to be involved depends on your situation, so it is worth confirming with a lawyer. A lawyer can confirm the steps for your situation.
Who pays the trustee while this is going on?
A trustee may receive a fair and reasonable allowance not exceeding 5% of the gross aggregate value of the estate, unless the trust instrument sets the allowance. On notice from a beneficiary, a trustee must pass accounts annually. If you think the pay is too high, how to raise it depends on your situation, so it is worth confirming with a lawyer.
Sources
- Trustee Act, BC Laws — bclaws.gov.bc.ca
Links go to official government, court and regulator pages. The law changes — confirm you are reading the current version.
This is a wills & estates question
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