Trust Beneficiary Loses Trustee Removal Action & Appeal
Anyone involved in the administration of a Palm Beach trust knows that a Florida trust beneficiary cannot remove a trustee just because the beneficiary doesn’t like the trustee. Or, put a better way perhaps: a Palm Beach probate court will not remove a Florida trustee just because the beneficiary and trustee don’t get along. More is needed to remove a trustee under the Florida Trust Code. Under Florida law, for a trust beneficiary to successfully remove a Palm Beach trustee from continuing to serve as trustee, you need to PROVE that the trustee is unfit, engaged in a breach of fiduciary duty, caused damage to the trust or otherwise is interfering with the efficient administration of the Florida trust. Here’s a Hawaii trust case from 6 days ago where a trust beneficiary was representing himself, and lost his trust lawsuit and his appeal.
Trust Beneficiary and the Revocable Living Trust
- Mark is a trust beneficiary of a Revocable Living Trust Agreement dated April 28, 1995 (Trust) ( In Palm Beach, many Florida residents have a Florida revocable trust as part of estate plan. The revocable trust is sometimes referred to as a living trust or a revocable living trust. This Florida trust becomes irrevocable upon the death of the trust creator, called the “grantor” or “settlor”, at which time the named successor trustee serves.)
- This trust beneficiary appeals two August 1, 2011 judgments entered by the Circuit Court Denying Beneficiary Mark’s Petition to Remove Trustee (James)
- In his trust appeal, Mark argues that the Circuit Court erred when it declined to remove James the Trustee as the Trustee of the Trust.
- The trust beneficiary’s legal position ?
- the Circuit Court improperly determined that the trustee was honest;
- the Circuit Court failed to apply existing Hawai’i law on trustee removal;
- the Master appointed by the Circuit Court had a conflict of interest because he represents trustees and he is using his master position to lobby for new law to make it harder to remove a trustee;
- the Master failed to adequately investigate the Trustee’s accountings, including that he failed to investigate whether the Trustee embezzled $49,000 from the Trust; and
- the Circuit Court improperly adopted the Master’s report, which did not support removal of the Trustee.
Court Denies Removal Lawsuit – standard to remove a trustee
Q: What will it take for a court to remove a trustee ?
Mark lost the trust lawsuit to remove the trustee: and this decision of the Probate Court (their Circuit Court) was upheld ON APPEAL.
Q: So, what does Hawaii trust law say about removing a trustee ?
A: ” The power of a court of equity to remove a trustee is a discretionary power and its exercise will not be disturbed on appeal unless the discretion has been abused…. ”
How to Remove a Trustee of a Revocable Trust
- The appeals court understood, much like Florida trust law, that it is not necessarily a question of whether the Hawaii appeals court would remove the trustee for these causes, if the truste was on trial here
- Rather: ( here’s the trust law analysis) whether the trial [probate ] court, in refusing to remove the trustee, did or did not wisely exercise the discretion which trust law empowers
- Whether a trustee should or should not be removed is up to the sound discretion of the probate court
- this is important: Florida trust law has a similar provision: the appeals court of a Florida trust lawsuit will not over-rule a Palm Beach probate court just because they may have decided something differently than the trustee or the probate court did.
- The analysis in a Palm Beach trust appeal is: did Palm beach probate court judge abuse its discretion? Was the ruling of the Palm Beach probate court supported by competent substantial evidence?
- It depends on the facts & circumstances of each particular trust and the trust case.
- A probate court may and will remove a trustee who has been guilty of some breach of trust or violation of duty
- The exercise of this function by a trust court rests in its sound judicial discretion ( Florida law is similar: probate judges have incredible authority, power and discretion)
Trust Beneficiary Can’t Prove Embezzlement of Trust Funds
- There was no evidence in the record supporting the trust beneficiary’s suggestion that Trust funds were embezzled and/or otherwise missing
- Young otherwise fails to support his contention that the Circuit [probate]Court abused its discretion when it adopted the Master’s recommendation that the Trustee need not be removed.
Take Away: for trust beneficiaries: you actually have to UNDERSTAND the trust law and PROVE your case in the Probate Court. This requires evidence.
If you would like to read the entire trust appeal opinion, here’s the link: http://www.courts.state.hi.us/docs/opin_ord/ica/2014/March/CAAP-11-0000637sdo.pdf