Acting as Trustee of a Trust can be challenging, and you should understand the responsibilities and duties involved if you are to serve in such a position. Although you may have initially been willing to assume this role, there may come a time when you know you want to resign as Trustee. Perhaps the administration of the Trust is taking more time and energy than you have available, or perhaps your health has deteriorated to the point where you no longer can properly carry out your duties; you don’t need to have a specific reason to resign. However, if you do need to resign as Trustee of a Trust there are a series of steps that should be followed to ensure that you are released, as much as possible, from any further liability.
A Trustee resignation should occur pursuant to the terms of the Trust. As long as you are Trustee, you are a fiduciary of the Trust with a duty of loyalty and a duty of care to the Trust and to the beneficiaries. Therefore, you must resign properly in order to ensure that you are not held responsible for problems that may occur due to your resignation or after your resignation. Even if the terms of the Trust seem clear and easy, you should consult with an attorney to ensure you are in compliance with the Trust and the law.
To resign as Trustee, the following steps generally must occur:
1. Check the original Trust document to see if there is a successor Trustee named. If there is no successor Trustee listed, a new Trustee will have to be appointed. The Trust may allow you to appoint a successor Trustee, but a thorough examination of the Trust will be required to determine this. If one or more of the original Grantors are still living and capable, they can name a successor trustee, if the Trust is a Revocable Trust. If the Grantor is unable to appoint a new Trustee, the current beneficiaries may be able to appoint a new Trustee. As a last resort, the Court always has the ability to appoint a successor Trustee. Whether these options are available to you depends largely on the terms of the Trust and the type of Trust.
2. You will need to prepare a full financial accounting of the Trust and provide all records relating to the Trust, including tax returns, statements from financial institutions, contracts you signed as Trustee, loans you made, and any other documentation relating to the Trust and its administration. If you are entitled to compensation and wish to take it, check with your attorney to determine the amount of compensation you may take under State law and the terms of the Trust. This accumulated information will make the transition for the new Trustee much easier and will help you avoid future liability.
3. Obtain a Trustee Resignation Form from your attorney or the Court and complete and sign it in the presence of a notary public.
4. Make copies of your resignation. Give a copy to the new Trustee, mail a copy to all the trust beneficiaries and keep one in your personal file.
5. Assist the new trustee with any transitional issues as needed.
For more information on Trusts and Trustee resignations, contact Davis & McCann, P. A., Dodge City, KS. We are members of Wealth Counsel, a national consortium of Estate Planning Attorneys and the National Academy of Elder Law Attorneys (NAELA). We focus our practice on providing clients with the best legal advice on Estate Planning, Medicaid and Long-term Care Planning, Family Business/Small Business Succession Planning, Probate, Trust Administration, Real Estate Contracts/Deeds/1031 Exchanges, and related matters.
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