Under the Uniform Trust Code, which applies to trusts in Wyoming, cause for removal of a trustee includes a breach of fiduciary duties. It also includes:
(i) The trustee has committed a serious breach of trust; (ii) Lack of cooperation among cotrustees substantially impairs the administration of the trust; (iii) Because of unfitness, unwillingness or persistent failure of the trustee to administer the trust effectively, the court determines that removal of the trustee best serves the interests of the beneficiaries; (iv) There has been a substantial change of circumstances, or removal is requested by all of the qualified beneficiaries, and the court finds that removal of the trustee best serves the interest of all of the beneficiaries and is not inconsistent with a material purpose of the trust, and a suitable cotrustee or successor trustee is available.
The Wyoming Supreme Court has recognized other grounds for removal:
1. Trustees may be removed for a variety of grounds, ranging from habitual drunkenness to tax evasion, to disobedience of directions in the trust agreement.
2. Mismanagement of the estate arising from a misconception or misunderstanding of the trustee's duties may be a ground for removal, but not if no serious harm has been done and no dishonesty or want of capacity is indicated. Similarly, a mere error of judgment is insufficient.
3. Regarding hostility between a trustee and a beneficiary as grounds to remove a trustee, we have said: Hostility may naturally exist in trust relationships since trusts are created to withhold control of the trust principal from the beneficiaries. Hostility between the trustee and the beneficiaries of the trust alone is insufficient to require the removal of the trustee. To be sufficient to require removal, the hostility must interfere with the proper administration of the trust.
What if there is no "cause" requirement language in the trust? If the language says "the trustee may be removed without cause by a majority of the beneficiaries? Other showings required, in addition to or in place of the foregoing would be:
- breach of fiduciary duties
- conflict of interest
- self dealing
- gross and willful misconduct
Note that courts are more reluctant to remove a trustee who has been chosen by the settlor than one who is court appointed.
Please contact me regarding the standard used in Wyoming to determine if the trustee of your trust is performing as required. I offer a free consultation: 307.200.1914