The role of executors and trustees ("trustees") is to manage and administer the trust estate on behalf of the beneficiaries and ultimately distribute the trust estate in terms of the will or the trust deed.
There is a high bar to remove trustees from their role as it is generally presumed that they were chosen for this role because the truster or the deceased person trusted them to fulfil their wishes. The Trusts and Succession (Scotland) Act 2024 ("the 2024 Act") seeks to make it easier to remove trustees in certain circumstances but this is only partially in force at the time of writing.
In some cases, the trustee may be willing to resign as trustee. However, if the trustee refuses (or is unable) to voluntarily resign from their role, steps must be taken to have the trustee removed.
The trust deed
The starting point is to review the trust deed, which may include provisions for the removal of trustees. For example, the trust deed may provide that the person who established the trust has the power to remove trustees, or the trust deed may allow the beneficiaries or fellow trustees to do so. If the trust deed does not allow for trustees' removal, under the current law, it is in most cases necessary to apply to the court to have the trustee removed.
The current law
Some provisions of the 2024 Act are already in force which allow for the removal of trustees without recourse to the court in limited circumstances. A trustee can now be removed by a majority of their co-trustees if the trustee was (i) a member of a regulated profession when appointed as trustee, (ii) was appointed to provide their expertise in the management of the trust, and (iii) has ceased to work or is otherwise not entitled to practise within that regulated profession.
Beyond that, it is currently necessary for a court action to be raised (most likely by the other trustees or the beneficiaries of the trust) to have a trustee removed. On the more extreme end of the scale, the 2024 Act allows the court to remove someone convicted of murder or culpable homicide from acting as executor in their victim's estate. The court can also remove a trustee who has become "insane" or incapable of acting by reason of physical or mental disability or has been absent from the United Kingdom continuously or missing for a period of at least six months. If "insanity" and incapacity are proven, the court has no discretion and must remove the trustee in question. The court can decide whether or not to remove the trustee in cases of continuous absence or disappearance.
In any other circumstances, the Court of Session presently has discretion under common law to remove a trustee through the exercise of the nobile officium (the noble power of the Court of Session). Any one or more of the trustees and/or beneficiaries may make an application to the court to have a trustee removed. The court will only use this power if there are no alternative options available and tends to only grant removal if there has been a serious "malversation of office" and the executor/trustee remaining in office would prevent, prejudice or obstruct the execution of the trust. The court will therefore not remove a trustee because of disagreement or disharmony between the trustees or where the trustee is responsible for minor breaches of duty. Examples of where the court has been willing to use this power to remove trustees are where the trustee has refused to discharge their duties (e.g. ignoring correspondence and sign return documents) or there has been an insurmountable conflict of interest.
Pending changes to the law
The 2024 Act is in the process of coming into force which seeks make it easier to remove trustees in certain circumstances. Once fully in force, the 2024 Act will allow trustees to be removed in the following additional circumstances:-
- by majority of their co-trustees where they are incapable, convicted of an offence which involves dishonesty or imprisonment for an offence, contempt of court or failure to pay a fine;
- by unanimous decision of the beneficiaries of the trust. However, those beneficiaries must be absolutely entitled to the trust property, aged 18 or over, and have capacity to make such a decision.
- by the court where the trustee is unfit or incapable of carrying out their trustee duties, is untraceable, neglects their trustee duties or acts in such a way that is inconsistent with their fiduciary duty as a trust.
These provisions are not yet fully in force and it is still necessary to rely on the current law when seeking to remove a trustee.
Conclusion
It can be challenging, time-consuming and expensive to remove a trustee in Scotland. Legal advice should be sought early when removal is being considered as it may be possible to reach a swifter and more amicable resolution through alternative methods (i.e. negotiation with the trustee in question). The above also highlights the importance of carefully selecting the right group of trustees in the first instance in order to avoid issues around removal of trustees in the future.
Our private wealth dispute lawyers have expertise on all aspects of contentious executries and trusts, including challenges to trustee decision making and breach of trust, and removal of executors and trustees.
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