Common Reasons a Trustee Can Be Removed from a Trust

When a loved one creates a trust, they often picture seamless management of their assets. In reality, trust administration can turn messy if the person in charge falls short.

At Bassett Murray Law Group, PLLC, our thirty-plus years of Michigan estate planning and probate work have shown us just how quickly trouble grows when a trustee missteps. This article looks at the situations that can lead to a trustee’s removal under Michigan law. We offer this information for educational purposes only; if you believe action is needed, please contact a lawyer immediately.

What is a Trustee and Their Fiduciary Duty?

A trustee is the individual or corporate entity named to handle trust assets for the benefit of the beneficiaries. While the title sounds simple, Michigan’s Trust Code places strict obligations on the trustee.

Those obligations, known as fiduciary duties, require the trustee to act in good faith and place beneficiaries first. Under MCL 700.7803 and related sections, the trustee must provide:

• Loyalty – avoid self-dealing or personal gain.
• Impartiality – treat all beneficiaries fairly under the terms of the document.
• Prudence – invest and manage property with the care a reasonable person would use.
• Transparency – keep accurate records and provide information on request.

When any of these points are ignored, beneficiaries may seek court intervention.

Grounds for Removing a Trustee in Michigan

The probate court will not replace a trustee simply because feelings are hurt. A petitioner must show a violation of the trust’s terms or the duties outlined above. Michigan Compiled Laws 700.7706 lists several grounds, and we break them down below.

Breach of Trust

The statute permits removal for a “serious breach of trust.” This occurs when the trustee disregards the written instructions or fails to meet fiduciary duties. Examples include taking trust funds for personal use, failing to make required distributions, or investing assets in speculative ventures that fall outside the standards of care.

Incapacity or Unfitness

A trustee must be able to perform the job. Dementia, debilitating illness, addiction, or obvious lack of skill can render the trustee unfit. When day-to-day management suffers, the court can step in.

Conflict of Interest

Any clash between the trustee’s personal interests and those of the trust can justify removal. Picture a trustee who owns a company and sells trust property to that company at a discount. Even full disclosure may not cure the conflict if beneficiaries are harmed.

Failure to Cooperate Among Co-Trustees

Michigan trusts often name siblings or adult children as co-trustees. When they cannot reach unanimous decisions and the administration stalls, one or more may need to step aside so the work can move forward.

Persistent Failure to Administer Effectively

A pattern of late tax filings, poor recordkeeping, or ignored beneficiary requests can persuade a judge that the trustee lacks the diligence the job requires. One mistake may not be enough, but repeated neglect usually is.

Hostility Towards Beneficiaries

Courts do not punish mere personality clashes. Yes, the open animosity that blocks reasonable communication or causes biased decisions can be a basis for removal. The focus stays on whether the friction harms the trust.

Charging Excessive Fees

Michigan allows trustees “reasonable” compensation. When invoices bear no relation to the work performed, beneficiaries may seek both removal and a refund of overpayments.

Who Can Petition for Removal?

The law limits standing to those with a real stake in the trust. Typically, the following may file in probate court:

1. Any current beneficiary.
2. A co-trustee.
3. The settlor, if the trust remains revocable.

If you do not fall into one of these groups, the court will likely dismiss the petition for lack of interest.

The Process of Removing a Trustee

Moving a trustee aside involves formal court action. The basic steps usually look like this:

Typical Removal Timeline and Key Task
Step	Main Actor	What Happens
1. Draft petition	Beneficiary or co-trustee with counsel	Alleges statutory grounds, cites evidence, requests removal and relief.
2. File and serve	Petitioner	Petition filed in county probate court, notice sent to trustee and other interested parties.
3. Trustee response	Trustee’s counsel	Answers allegations, may provide accounting or defenses.
4. Hearing	Probate judge	Considers testimony, documents, and may order mediation or interim measures.
5. Court order	Probate judge	Removes trustee, appoints successor, or denies petition; may order repayment of losses.

 

Because litigation moves under strict procedural rules, most beneficiaries work with counsel who are familiar with trust disputes. Missing a deadline or failing to include required facts can sink an otherwise strong claim.

Seeking Trustee Removal? Bassett Murray Law Group, PLLC, Can Assist

Protecting families and investing in improving lives has been our calling for over three decades. Whether a trustee has drained assets through careless investing or simply stopped returning your calls, our team is ready to act quickly. We focus on practical solutions that keep the trust’s purpose intact while safeguarding every beneficiary’s interest.

Feel free to call us at 734-930-9200 in Ann Arbor or 231-427-2292 for our Petoskey office, or visit our website to schedule a consultation and review your options.