2005 Vermont Code - § 2314. — Trustee may be removed; special fiduciary; petition for removal by beneficiary or co-trustee

§ 2314. Trustee may be removed; special fiduciary; petition for removal by beneficiary or co-trustee

(a) When a trustee becomes incapacitated or otherwise unable to discharge the trust, or is obviously unsuitable, and when, for any cause, the interests of the trust estate require it, after giving notice as provided by the rules of probate procedure, the probate court may remove the trustee.

(b) When a trustee fails to perform duties required by law, the rules of probate procedure or order of the probate court, the court may suspend the trustee from further duties and appoint a special fiduciary to assume temporarily the powers and duties of the trustee replaced. A special fiduciary shall give a bond as is otherwise required in the proceeding.

(c) A co-trustee or a majority of the beneficiaries to whom or for whose use the current net income of the trust estate is at the time authorized or required to be paid or applied and who shall at the time be at least 18 years of age who believe that an existing trustee should be replaced by a more suitable trustee may petition the court for a replacement. The court may grant the petition, remove an existing trustee, and appoint a replacement trustee if, after giving notice as provided by the Vermont Rules of Probate Procedure, the court finds that a change in trustee would be in keeping with the intent of the grantor. In deciding whether to replace a trustee, the court may consider the following factors:

(1) Whether removal would substantially improve or benefit the administration of the trust.

(2) The relationship between the grantor and the trustee as it existed at the time the trust was created.

(3) Changes in the nature of the trustee since the creation of the trust.

(4) The relationship between the trustee and the beneficiaries.

(5) The responsiveness of the trustee to the beneficiaries.

(6) The experience and skill level of the trustee.

(7) The investment performance of the trustee.

(8) The charges for services performed by the trustee.

(9) Any other relevant factors pertaining to the administration of the trust.

(d) As used in subsection (c) of this section:

(1) "Beneficiary" means a person who:

(A) has a present or future beneficial interest in a trust, vested or contingent; or

(B) in a capacity other than that of trustee, holds a power of appointment over trust property.

(2) "Court" means the probate court of the district in which the grantor resides or resided before dying or moving out of state, or where a co-trustee resides, or where a beneficiary resides.

(3) "Grantor" means a person, including a testator, who creates or contributes property to a trust. If more than one person creates or contributes property to a trust, each person is a grantor of the portion of the trust property attributable to that person's contribution except to the extent another person has the power to revoke or withdraw that portion.

(4) "Settler" and "grantor" have the same meaning.

(5) "Trust" means an express trust created by a trust instrument, including a will, whereby a trustee has the duty to administer a trust asset for the benefit of a named or otherwise described income or principal beneficiary, or both; "trust" does not include a resulting or constructive trust, a business trust which provides for certificates to be issued to the beneficiary, an investment trust, a voting trust, a security instrument, a trust created by the judgment or decree of a court, a liquidation trust, or a trust for the primary purpose of paying dividends, interest, interest coupons, salaries, wages, pensions or profits, or employee benefits of any kind, an instrument wherein a person is nominee or escrowee for another, a trust created in deposits in any financial institution as defined in 8 V.S.A. § 10205(5), or other trust the nature of which does not admit of general trust administration.

(6) "Trustee" means an original, added, or successor trustee or co-trustee.

(e) A court may order trustees who are replaced pursuant to an action brought under this section to reimburse the trust for attorney fees and court costs paid by the trust relating to the action. (Amended 1985, No. 144 (Adj. Sess.), § 104; 2003, No. 106 (Adj. Sess.), § 2, eff. May 6, 2004; 2005, No. 213 (Adj. Sess.), § 2.)