My previous blog post generally discussed principles associated with the removal of executors or personal representatives of an estate. This post is similar except that it analyzes this issue in the context of trusts rather than estates. Every trustee of a trust, and every beneficiary of a trust, should be aware of these principles as well.
To remedy a breach of trust under the Arkansas Trust Code, the Court may:
(1) compel the trustee to perform the trustee’s duties;
(2) enjoin the trustee from committing a breach of trust;
(3) compel the trustee to redress a breach of trust by paying money, restoring property, or other means;
(4) order a trustee to account;
(5) appoint a special fiduciary to take possession of the trust property and administer the trust;
(6) suspend the trustee;
(7) remove the trustee as provided in § 28-73-706;
(8) reduce or deny compensation to the trustee;
(9) subject to §28-73-1012, void an act of the trustee, impose a lien or a constructive trust on property, or trace trust property wrongfully disposed of and recover the property or its proceeds, or
(10) order any other appropriate relief.
See Ark. Code Ann. § 28-73-1001(b).
Also, section 706 of the Trust Code further elaborates on the removal of an trustee:
(a) the settlor, a co-trustee, or a beneficiary may request the court to remove a trustee, or a trustee may be removed by the court on its own initiative.
(b) A court may remove a trustee if:
(1) the trustee has committed a serious breach of trust;
(2) lack of cooperation among co-trustees substantially impairs the administration of the trust;
(3) because of unfitness, unwillingness, or persistent failure of the trustee to administer the trust effectively, the court determines that removal of the trustee best serves the interests of the beneficiaries;
(4) there has been a substantial change of circumstances or removal is requested by all of the qualified beneficiaries, the court finds the removal of the trustee best serves the interests of all of the beneficiaries and is not inconsistent with a material purpose of the trust, and suitable co-trustee or successor trustee is available.
See Ark. Code Ann. § 28-73-706(a) and (b) (emphasis added).
So, as one can tell the grounds for removal of a trustee are very broad. Accordingly, similar to estates, those administering trusts in the State of Arkansas must take their duties seriously so as to avoid placing themselves in a situation in which their actions and inactions could be questioned. Similarly, beneficiaries of a trust should be vigilant in monitoring the conduct of the trustee to ensure that they are properly doing their job. In the appropriate case, Arkansas courts have not hesitated to remove trustees where the facts and circumstances warrant it.