Houston Estate Planning and Elder Law Attorney Blog
Disputes over a family trust in Texas often begin when a trustee, frequently a sibling, stops answering questions, will not produce records, and has not made the distributions the beneficiaries expected. Texas law gives beneficiaries a way to ask a court to replace that trustee. The remedy is discretionary, and the grounds are specific enough that the way a case is built makes a real difference.
Under Texas Property Code § 113.082, a trustee may be removed under the trust’s own terms, or a court may remove a trustee after a hearing on the petition of an interested person. The statute lists four grounds, including a trustee’s failure to make an accounting required by law or by the trust, and the court may also deny the trustee part or all of their compensation. McCulloch & Miller advises beneficiaries in Austin and across Texas on these disputes as part of its trust planning and administration practice.
The Four Grounds for Removing a Trustee in Texas
Removal of a trustee is a court order ending a trustee’s authority over the trust and replacing them with a successor, made on one of the grounds the statute recognizes.
Under § 113.082(a), a court may, in its discretion, remove a trustee if:
- the trustee materially violated or attempted to violate the terms of the trust, and the violation resulted in a material financial loss to the trust;
- the trustee became incapacitated or insolvent;
- the trustee failed to make an accounting required by law or by the terms of the trust; or
- the court finds other cause for removal.
The first ground requires both a material violation and a material loss, which can be hard to prove quickly. The accounting ground can move faster, since the proof is a documented demand and a documented failure to respond.
The second ground covers a different kind of case. A trustee who has developed dementia, or whose own finances have collapsed, may be acting in complete good faith and still be unable to serve. The statute allows removal on incapacity or insolvency without any showing of misconduct.
Starting With a Written Demand for an Accounting
The accounting ground usually begins with a letter. Under § 113.151(a), a beneficiary may demand a written statement of accounts by written demand. If the trustee fails or refuses to deliver it on or before the 90th day after receiving the demand, any beneficiary may sue to compel it. A trustee is not required to account more than once every 12 months unless a court orders otherwise.
A trustee who ignores a proper demand for 90 days has created the record the removal ground needs. If the beneficiary then succeeds in court, the court may, in its discretion, award court costs and reasonable attorney’s fees against the trustee.
If that describes your situation, call McCulloch & Miller at (713) 333-8900 to set up a time to talk.
Where the Case Is Heard and What the Court Can Order
Proceedings concerning trusts are heard in district court under Property Code § 115.001, so a beneficiary of an Austin trust would ordinarily file in a Travis County district court. Removal is one tool among several. Under § 114.008, the court may compel the trustee to perform, order an accounting, or suspend the trustee. It may also appoint a receiver to take over the trust property, compel the trustee to restore property or pay money to the trust, and reduce or deny the trustee’s compensation.
That range allows a beneficiary to ask for what the situation actually calls for. A trustee who is disorganized but honest may need an accounting order more than a removal, while a trustee who has taken trust money may face both removal and an order to repay it. The firm weighs those choices with beneficiaries through its trust administration work before any petition is filed.
What Happens After a Trustee Is Removed
A successor takes over under the method the trust instrument prescribes. If the instrument does not provide one, § 113.083 allows a court to appoint a successor, and requires it to do so on the petition of any interested person. Under § 113.084, the successor then holds the powers the trust conferred on the original trustee.
Removal does not end the removed trustee’s exposure. Section 113.082(b) allows a beneficiary, cotrustee, or successor trustee to treat a violation that led to removal as a breach of trust, which can support a separate claim for losses.
Questions Texas Beneficiaries Ask About Removing a Trustee
Who Can Ask a Court to Remove a Trustee?
An interested person. Property Code § 111.004(7) defines that term to include a trustee, a beneficiary, and anyone with an interest in or claim against the trust or affected by its administration.
Does the Trust Have to Lose Money Before a Trustee Can Be Removed?
Not always. A financial loss is required for the ground based on violating the trust’s terms, but not for the grounds based on a failure to account, incapacity or insolvency, or other cause the court finds.
Can a Removed Trustee Keep Their Fees?
Not necessarily. Section 113.082(a) allows the court to deny part or all of the trustee’s compensation when it orders removal.
Building a Removal Case That Holds Up
Beneficiaries who document a proper accounting demand and the trustee’s response, or lack of one, start from a much stronger position than those who begin with a complaint about tone or delay. The court has discretion either way, and the facts a beneficiary documents before filing are what it will have to work with. Call McCulloch & Miller at (713) 333-8900 or contact the firm’s Houston office to schedule a consultation.