Minnesota Trust Law: When and How to Remove a Trustee
A trust is commonly an element of an estate plan. Trusts can be created independently of an estate plan as well. There are many different types. Some go into effect on the death of the person creating the trust.Others become effect immediately on signing of the trust documents and funding of the trust.
Regardless of how or when a trust is created, or what purpose is served by the trust, every trust has a trustee or co-trustees, charged with administering the trust. Trustees have significant responsibilities and legal duties. Some are spelled out in the trust document. Others are imposed by law. If a trustee violates any of these duties, what can be done? Removing the trustee is one option.
In some cases, the trust document itself may address removal of a trustee. In all cases in Minnesota, provisions of state law also address how to remove a trustee.
How to Remove a Trustee in Minnesota
On January 1, 2016, a new statute on trusts went into effect in Minnesota, updating state law provisions regarding trustee removal. The new law made some subtle but important changes.
Authority to remove a trustee is vested in Minnesota courts. A court can remove a trustee on its own or on petition by all qualified beneficiaries. A qualified beneficiary is a person actually receiving distributions of trust income or principal.
The law sets out specific reasons, in addition to acting on a request by beneficiaries, for a court to remove a trustee. Those reasons are:
- A “serious breach of trust” by the trustee
- Lack of cooperation among co-trustees that adversely affects trust administration
- The “unfitness, unwillingness, or persistent failure” of the trustee in administering the trust
- A substantial change of circumstances
If removal is requested by all qualified beneficiaries or the court finds a substantial change in circumstances, the court also must determine that removal of the trustee serves the best interests of all beneficiaries and is not inconsistent with the fundamental purpose of the trust.
Breach of Trust by a Trustee
“Breach of trust” is specifically addressed by the Minnesota trust law: if a trustee violates any of the duties owed to a beneficiary, the violation constitutes a breach of trust.
In addition to duties imposed by the trust document, the trust law lists specific trustee duties, including:
- Good faith administration of the trust: honoring the trust’s terms and purposes, interests of the beneficiaries, and state law
- A duty of loyalty to the beneficiaries: putting their interests above the trustee’s own interests
- Impartiality in administering a trust with more than one beneficiary: giving due regard to each beneficiary’s interests
- Prudent administration: exercising reasonable care, skill, and caution by considering the terms and distribution requirements of the trust and other relevant circumstances
In practical terms, whether a breach of trust occurred is a question for the court to determine based on all the facts and circumstances in each individual case.
A trustee who violates duties to beneficiaries risks a lot more than simply being removed as trustee. Minnesota trust law gives a court broad discretion in remedying a breach of trust. The court can issue injunctive relief prohibiting or requiring specific action by the trustee, as well as order any other relief the court considers appropriate. In addition, the trustee may be liable for damages based on detriment caused to the trust or profit made by the trustee on account of the violation.
Talk With a Minnesota Trust Litigation Attorney
Seeking removal of a trustee is a serious, fact-based process, requiring the skill and knowledge of an experienced trust litigation attorney. At the Dave Burns Law Office, a focus of my practice is trust disputes and litigation, including claims against trustees for failure to comply with the terms of the trust or perform the duties required by state law. I work with family members, beneficiaries of estates, and trustees.
If you have a contested trust issue that may require litigation, I welcome you to contact me at (612) 677-8351 or by emailing firstname.lastname@example.org. I work with clients throughout the Twin Cities metro area and am available to meet with clients in both Minneapolis and St. Paul.
The Dave Burns Law Office hopes you find this article helpful. But please do not rely on it as legal advice. The law changes regularly and the outcome of any legal matter depends on its unique circumstances. View full disclaimer