Filling a Trustee Vacancy

When establishing a trust, the selection of a trustee is of paramount importance. The trustee manages the assets of the trust for the benefit of the beneficiaries in accordance with the terms of the trust. Without a responsible and effective trustee, the trust will not carry out its objectives. 

In the event that the trustee ever becomes unable or unwilling to continue to act as trustee, often due to disability or death, a trust should name a successor trustee and several alternates to ensure that the trust will always be managed by a trusted individual. There is no legal limit to the number of alternate successor trustees that can be named in a trust and having a “deep bench” is important. 

What happens when all the named alternate successor trustees are unable or unwilling to serve as trustee? A good trust will provide a mechanism for the appointment of a successor trustee to fill a trustee vacancy that avoids the delay and expense of court intervention. A common provision would be to allow a majority of the trust’s beneficiaries to appoint a trustee in the event of a vacancy. Another possibility is to name an independent third party, such as trusted family member, friend, or professional, to have the power to appoint a trustee to fill a vacancy. However, some trusts fail to provide adequate instruction on filling a trustee vacancy. 

In the event that a trust is silent on the issue of filling a trustee vacancy, the California Probate Code provides guidance. California Probate Code Section 15660(c) provides that all adult beneficiaries may agree on appointing a “trust company” to fill the vacancy without any court intervention. California Probate Code Section 83 defines the term, “trust company,” as an “entity that has qualified to engage in and conduct a trust business in this state.” “Trust companies” include certain banks and other financial institutions that have departments that are dedicated to serving as trustees of trusts for a fee. 

If the beneficiaries do not wish to have a “trust company” to fill a trustee vacancy, then the beneficiaries or other “interested parties” may petition the court to appoint an individual to fill the trustee vacancy. Such a petition would be filed in the local probate court pursuant to California Probate Code Section 17200. The petition would describe the trust, describe the problem of the trustee vacancy, describe the proposed successor trustee, and provide any other information that the court might find relevant. A hearing would be set where the judge would either approve or deny the petition. 

KRASA LAW, Inc. is located at 704-D Forest Avenue, Pacific Grove, California 93950 and Kyle may be reached at 831-920-0205. 

Disclaimer: This article is for general information only. Reading this article does not establish an attorney/client relationship. Before acting on any of the information contained within this article, it is important to consult a competent attorney who is licensed to practice law in your community.