Replacement by Grantor or Beneficiaries
If the trust is revocable -- as stated in the trust deed or presumed by state law -- the grantor may simply revoke the trust and create a new trust with a new trustee. If the trust deed so allows, he may unilaterally replace the trustee without revoking the original trust. If the trust is irrevocable -- either by the terms of the trust deed because the grantor has died or because the trust was created by the grantor's will -- the trust deed may still contain a provision allowing beneficiaries to unanimously agree to replace the trustee. Under these circumstances, replacement of a successor trustee does not require a court order.
Replacement by Trust Protector
A trust protector is a position, created by some trust deeds, whose sole purpose is to hire and fire trustees. The trust protector may be an individual or an entity. The trust deed may grant the trust protector the unfettered right to replace the trustee or it may require that removal is based on specified grounds only. The trust protector does not need a court order to act, yet neither the grantor nor the beneficiaries can force him to act. Beneficiaries seeking trustee replacement may appeal to the trust protector to replace the trustee.
Replacement by Court Order
A trustee may be removed by court order. The trust grantor or beneficiaries may file a petition demanding the removal of the trustee. Courts in some states, such as Pennsylvania, will automatically replace a trustee if the grantor and all beneficiaries consent. Other states require the replacement is based on grounds -- a trustee cannot be removed for simply making decisions that are unpopular with beneficiaries. Two types of misconduct are possible --- breach of the fiduciary duties of loyalty and care, such as by embezzling or carelessly managing funds, and breach of the grantor's original intentions as expressed in the trust deed.
A trustee may be either an individual or an entity such as a trust company. If an individual, he must be at least 18 years old. A trustee must also possess full legal rights to perform acts such as managing money or selling property. For example, if the trustee is an individual, he must be mentally incompetent; if a corporation, he must be validly incorporated under state law. Finally, he must be willing and able to perform both his fiduciary duties and his duties under the trust deed.