Can a Beneficiary Remove a Trustee in British Columbia?

If you are a beneficiary of a trust or an estate and you are unhappy with the trustee, you may wonder whether you can have them replaced.

This article does not try to set out a removal procedure. Instead it explains the standards British Columbia's Trustee Act sets for trustees, the tools beneficiaries have to check what a trustee is doing, and the points a court may consider. Those help you judge whether you have a real concern before you take the next step.

This article covers the law of British Columbia.

Start with what the trustee is required to do

A trustee may invest trust property in any form of property or security in which a prudent investor might invest, but this does not authorize investing in a manner inconsistent with the trust. When investing, a trustee must exercise the care, skill, diligence and judgment that a prudent investor would exercise.

A trustee is not liable for an investment loss if the conduct conformed to a prudent plan or strategy with reasonable assessment of risk and return. Investments are not assessed one by one, and gains may offset losses in damages, except where dishonesty is involved. So a single poor investment is not on its own proof of a problem.

Delegation to an investment agent

A trustee may delegate investment authority to an agent to the degree a prudent investor could under ordinary business practice. The trustee must set the investment objectives and act prudently in choosing the agent, setting terms, communicating objectives and monitoring performance. A trustee who does so is not liable for the agent's decisions.

Delegation is not allowed where the trust requires the trustee to act personally.

Asking for accounts

Executors, administrators, testamentary trustees and judicial trustees must obtain a court order passing their first accounts within 2 years of the grant or appointment. Other trustees may pass first accounts at any time.

That requirement does not apply if all beneficiaries approve the accounts in writing, or if the court directs otherwise. On notice from a beneficiary, a trustee must pass accounts annually. Reviewing accounts is often the most practical way to learn whether your concerns are justified.

Pay and protection from liability

• A trustee or executor may receive a fair and reasonable allowance not exceeding 5% of the gross aggregate value of the estate.
• An annual care and management fee not exceeding 0.4% of the average market value of the assets may be applied for.
• These limits do not apply where the trust instrument sets the trustee's allowance.
• The court may relieve a trustee from liability for breach of trust if the trustee acted honestly and reasonably and ought fairly to be excused.

The last point matters for your expectations. Even where a trustee made a mistake, the court has power to excuse an honest and reasonable trustee.

What to do next

Before taking any formal step, get clear on what is bothering you and what you can show. On notice from a beneficiary, a trustee must pass accounts annually, unless all beneficiaries approve the accounts in writing or the court directs otherwise. How the rest applies depends on your situation, so it is worth confirming with a lawyer.

• Get a copy of the will or trust document.
• Write a dated list of your concerns, such as delays, missing information or unexplained spending.
• Ask the trustee in writing for information and accounts.
• Consider giving notice that you require accounts to be passed annually.
• Speak with a lawyer before filing anything, since the right step depends on your situation.

Frequently asked questions