With the end of the week comes my final blog in my series this week on considerations to take into account when changing trustees.
Negotiated structures dealing with the retirement, removal and replacement of a trustee may include, or be a combination of, a deed, court order, preparation of accounts, a passing of accounts application, a release, indemnification, Judgment on the passing and Minutes of Settlement (Agreement) dealing with the resolution of the disputes arising therefrom.
A situation where a trustee wishes to retire and the administration of the trust has been simple, straightforward and has been substantially completed by the trustees to the satisfaction of all beneficiaries, who are sui juris, and there are no outstanding liabilities of the trust, will be completely different than one where beneficiaries are seeking to remove and replace a trustee for misconduct and/or in the context of a very complex administration.
The structure of the former situation might be a deed with an appropriate release (if an accounting by the trustees has been provided to the beneficiaries who, with the benefit of counsel, all consent and approve of same in writing, and the trustee’s compensation has been agreed to and taken).
The structure of the latter might include an Application to the Court to remove and replace the trustee on notice to all co-trustees and those with a financial interest. As part of the Application, an order would most likely be sought requiring that the outgoing trustee pass his accounts within a certain time period of the date of the order.
An order removing the trustee should address, amongst other things, the following: (i) the individual(s) being removed and the capacity being removed from; (ii) the appointed substitute trustee or, alternatively, confirmation that the remaining trustees will continue; (iii) the vesting of the trust property in the new trustee and/or the continuing trustees; (iv) that the outgoing trustee shall prepare formal accounts in accordance with the Rules of Civil Procedure and file those accounts and an Application to pass accounts within a certain period of the date of the order as to the date of removal; (v) the manner of compensating the new trustee; (vi) directions required, if necessary, to facilitate any of the above; and (vii) how the costs of the Application are to be dealt with.
In the end, the circumstances of each particular case will dictate which structure is most appropriate and prudent.
Have a nice weekend. Craig