The executor of a living trust, normally known as the trustee, is vested with the power to administer trust assets on behalf of the trust beneficiaries in conformity with the terms of the trust deed. The ease with which he can be removed from his position depends on a number of factors, including whether the trust is revocable or irrevocable.
Revocable and Irrevocable Living Trusts
As its name implies, a revocable living trust can be revoked by the trust grantor at any time. The trust assets legally belong to the grantor until they are distributed to beneficiaries. An irrevocable trust is difficult to revoke or amend, and as a consequence, its assets do not legally belong to the grantor; rather, they belong to the trust itself. The trust must pay taxes on any income generated by these assets. If the trust deed does not specify whether or not the trust is revocable, it is determined by state law. Different states apply different standards; some presume that the trust is revocable unless the trust deed states otherwise, while some presume that it is irrevocable unless the trust deed states otherwise.
Removing the Trustee of a Revocable Trust
The trust grantor determines the terms of the trust deed. Normally, a revocable trust contains no restrictions on the grantor's right to amend the terms of the trust by, for example, removing the trustee. If the trust deed does contain such restrictions, the grantor may either abide by these restrictions or simply revoke the trust and create a new trust with a new trustee. If no restrictions exist, the grantor may remove the trustee by simply recording an amendment to the trust deed that provides for the removal of the trustee, signing it and attaching it to the trust deed.
Removing the Trustee of an Irrevocable Trust
The laws of the various states authorize two ways to remove the trustee of an irrevocable living trust. One way is to comply with terms for removal contained in the trust deed, if the deed contains any such term. Some trust deeds appoint a "trust protector" who is vested with the authority to remove the trustee should it become necessary or desirable. Some states do not recognize trust protectors. The other way is to petition a court to issue an order removing the trustee. A court may be reluctant to do so even with unanimous beneficiary consent, however, unless there is evidence that the trustee has engaged in misconduct such as embezzlement.
Some trust deeds require the consent of all beneficiaries to remove the trustee. This might cause a problem if, for example, one of the beneficiaries is a small child without the capacity to understand the issue. The consent requirement might also cause a problem if a condition subsequent hasn't been met like if "Helen's children" are among the beneficiaries and Helen is childless at the time removal of the trustee is sought.