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If a successor trustee is also a beneficiary, is he excluded from voting if "all beneficiaries have to agree to remove trustee"?
Anonymous5 views5 answers
Would the MUTC 's committee modification of the definition of a beneficiary to “exclude holders of powers of appointment” let the remaining beneficiaries remove him? There is a sale deal on the table that the two remaining beneficiaries wish to take but the trustee refuses to sign the contract unless a significant portion of the money is placed into an account controlled exclusively by him with no accounting provided from his end. Additionally, the successor trustee is attempting to sell a contiguous parcel to the trust land owned by him and he is refusing to acknowledge the conflict of interest. There have been two legal battles so far (both instigated by the trustee) and the two remaining beneficiaries wish to avoid further litigation and remove the trustee in time to secure the sale.
All trusts are governed by the express language of the documents, which should be reviewed by an attorney familiar with trust law where the trust is settled, but the short answer to your question is no. A person's status as a trustee and as a beneficiary are completely separate. The beneficiary does not lose rights to their interest in the trust due to service as trustee. At the same time, the trustee must act independently for the benefit of all beneficiaries or as required by the trust document, without giving consideration to the effect of his interest as beneficiary. If he fails to do that as trustee, and that fact can be clearly proven, a court can remove him as trustee even against the express terms of the trust.
The answer to this question is no, the exclusion of holders of powers of appointment from the definition of "beneficiary" under the MUTC has no effect in the circumstance you describe. If the trustee is also a beneficiary, as stated at first, then he or she is a beneficiary. The MUTC's exclusion applies to mere power holders, not power holders who are also beneficiaries in their own right. As noted by others, the terms of the instrument will override this provision of the MUTC in any case. But it's simply not relevant to your inquiry. What you want to know is whether the Trustee who is also a beneficiary can vote against his own removal. The answer in Massachusetts is generally yes, unless the terms of the instrument provide otherwise.
The specific language of the trust and the power of appointment in question should be reviewed by an attorney familiar with trust law. It's possible that the trustee does not have a sufficient interest in the trust to qualify as a beneficiary entitled to vote on removal of the trustee.
Also, a trustee has a fiduciary duty of loyalty and impartiality to all of the beneficiaries. From what you say, the trustee may be violating his or her fiduciary duties as a trustee by refusing to do what is in the best interests of the beneficiaries, and it sounds like they have a clear conflict of interest.
You should definitely consult with an attorney.
