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Commonly trustees are appointed and removed pursuant to the terms of the deed of trust. Some trustees are happy to be removed, or retire of the own volition, others less so.
However, what of the trustees who are unable to elect to retire? What to do where a trustee has, for example, lost capacity, but cannot be removed as a trustee?
Inherent jurisdiction
Both the Trustee Act 1956, s 51 and the High Court’s inherent jurisdiction provide for the appointment and removal of trustees. Where the court acts in accordance with its inherent jurisdiction a trustee can be removed and not necessarily replaced: In the Matter of the Borrich Family Trust.
In the event a trustee is removed and replaced by consent under s 51 of the Trustee Act, conditions attaching the appointment could be made by the Court in the exercise of its inherent powers within the Court’s supervisory jurisdiction over trusts: Eggink v Eggink. Note that in this case the appointment of trustee was as an “independent trustee”, which is somewhat curious given that there is no recognition of categories of trustee for trust law purposes.
Incapacity
When a trustee can no longer act as a trustee due the effects of dementia, the appropriate course of action is the removal of the trustee, and if necessary the appointment of a replacement trustee. Such applications can be made by way of originating application. However, it is important that there are no competing positions or interests. In the case of Neverman v Hudson the Court raised the question as to whether (given that all of the discretionary beneficiaries had consented to the application) the consent of “any issue of any final beneficiary” should also be required. In this regard the court decided that the consent of that class of beneficiary was not required.
Also see the following examples of recent applications on incapacity of a trustee:
Simultaneous vesting orders
It can be appropriate to also obtain vesting orders at the same time a trustee is removed and a new trustee appointed. See Neverman v Hudson where an originating application was made for the removal of an incapacitated trustee, the appointment of a new trustee and a vesting order in respect of the trust’s assets. Note that the court has regard to the fact that the application was uncontroversial in deciding whether to allow it to proceed byway of originating application. Also see Estate re Kett .
Invalid appointments
Where an appointment of trustee is made by an appointor who is subject to undue influence the appointment of trustee is void. The appointment of a trustee by executors of a will that is the product of undue influence will also be void. See Green v Green, Fisher & Ors
Refusal to act
A trustee who will not acquit the trustee’s responsibilities can be removed. See Wright v Wright.
Friendly Societies
Trustees of Friendly Societies can be removed in accordance with s 28(3) Friendly Societies Act 1909. See Pritchard v Evans
Trustee retirement
Where a trustee retires but will not complete the requisite formalities a vesting order can be required even if there is no dispute regarding the retirement. See re Kleiman
Costs
Whether a retiring trustee is entitled to its own costs in a proceeding where the trustee seeks discharge as a trustee depends on the circumstances of the case. See Attorney-General v Murdoch. As noted Cambridge Trustees Limited v Brandon as in general rule, a trustee is not to be deprived of its costs unless it has acted unreasonably.
References:
Matters of Trust 
My wife’s “family” trust was established by her parents in 1984, with two Trustees (her parents). My wife, her sister and their children are beneficiaries. In 2007, my wife’s father passed away, and their lawyer was appointed as a Trustee. The Trust Deed stipulates a minimum of two trustees. When my wife’s mother passed away in 2009, the lawyer appointed his law firm as co-Trustee, and then a little later, added my wife and her sister as Trustees. There have been many issues of control exercised by the lawyer over the years, and it is my contention it would be beneficial if the lawyer retired as a Trustee. But unless he does so willingly, there seems no legal way to force him out. I should add the lawyer’s firm (naturally) is the Trust’s legal consultant and a close colleague of the lawyer was appointed as accountant shortly after the passing of the mother. The Trust’s assets (mainly property investments) are worth around $15,000,000 at market value. The lawyer & accountant, between them, charge fees of $180,000 p.a. Is there any way to break this monopoly of control?
Posted by anon | August 31, 2015, 9:26 amIn the event of deadlock between trustees the appropriate course of action can be to seek the assistance of the court so as to ensure trustees who are able to work together in the management of the trust.
Posted by vickiammundsen | January 2, 2017, 7:26 pmThanks for your reply, Vicki, and your comment. When you say “assistance of the court”, do you mean that it would be necessary to apply for a Court Order to force the lawyer to resign from his Trusteeship? The problem is that he does consider he has done anything unethical, whereas in my opinion, he certainly has. The nub of the problem is that his position is unchallengeable. By that I mean, he has the power under the Trust Deed to basically do what he likes. Any other comment would be welcomed.
Posted by Roger Watkin | January 22, 2017, 6:32 pmThank you for your comment. A considered response would require the deed of trust. However, as a general observation we note that it is not necessary for a determination regarding wrong-doing. See for example LOW HOCK PENG and ORS v ROTHCHILD TRUST (SCHWEIZ) AG and ORS [2017] NZHC 25
Posted by vickiammundsen | January 22, 2017, 10:49 pmTrustees do not need to have been unethical. The issue is the management of the trust for the benefit of the beneficiaries. See for example the recent decision in Low Hock Peng v Rothschild Trust (Schweiz) AG . In this case the Court made it clear that its role was not to determine the merits of the underlying issues (including the concerns of the defendants, other than that they were genuinely held fears) but whether, in accordance with s 51(1) of the Trustee Act 1956 it was expedient for the court to assist in the removal and replacement of the existing trustees, and also that it was inexpedient to do so without the assistance of the Court.
Posted by vickiammundsen | January 24, 2017, 7:48 pmDear Vicki
Thank you for your interesting, comprehensive, and easy to navigate website.
I wrote to you seeking advise last night. I wonder if I might request please, in the event that you make public my inquiry on your website, to please edit it and remove all the personal and identifiable information, such as the % etc. as I think I may have been more than slightly indesrete
Thank you, in advance, for your kind consideration.
Best wishes
Victories
Posted by victoire | December 29, 2017, 2:49 pmThank you for your comments. The e-mail that you refer to has not been received. Please send again.
Posted by vickiammundsen | December 29, 2017, 2:53 pmHow can I get a codicil removed? Parents did a Trust and will in 2004. Dad passed 09. Around 2012 Mom was displaying early on set of neurological dementia. Mom lived in Florida I live in Michigan. I made arrangements for a care taker to help care for her when I was in Michigan. I flew down regularly. Recent I obtained a copy of will. I was shocked to see not once but three times she’d added a codicil. My mother appointed a stranger as trustee. What can I do? What are my legal rights. I’m a interested party and want original papers honored. Mom wasn’t competent when this change was made. Should I contact the lawyer in Florida? Should I contact bar association in Florida? Any advice would be appreciated
Posted by Shelley staffig | April 7, 2018, 4:06 amWe recommend that you seek immediate legal advice in Florida. Depending on the nature of that advice further steps may be required.
Posted by vickiammundsen | April 7, 2018, 1:00 pmIn the case where a Trust was originally set up by a husband/wife where they are both settlors, trustees, beneficiaries and hold the power of appointment (of trustees):- If they separate and a Relationship Property Agreement records that one of them renounces their interest in the Trust in all capacities, does the signing of that Agreement suffice as documentation for the Trust or is there still required a Deed of Retirement of Trustee, Deed of Removal of Beneficiary,etc.
Posted by Ruth Cleaver | September 26, 2018, 3:39 pmSubject to the terms of the Trust there will likely need to be trust documentation to record this decision.
Posted by vickiammundsen | October 15, 2018, 10:24 pmIn the case where a Trust was set up by Mr X to nominate the Trust to purchase a bare land property with funds Mr X inherited and gave to the Trust by way of debt and consequently added his ex-girlfriend as a trustee and discretionary beneficiary of the trust – if they separate and the ex-girlfriend refuses to sign any documentation to remove herself from the Trust, can Mr X, who has the power as the Appointor, serve notice to his ex-girlfriend that she has been removed in all capacities, will that notice and the deed of removal and appointment of trustees without the removed trustee’s signature be sufficient to transfer the property into new trustees names?
Posted by Kaisa | February 11, 2021, 2:35 pmHello Kaisa
The starting point is to review the terms of the Trust in conjunction with legal advice.
Posted by vickiammundsen | February 13, 2021, 10:04 pmI created a trust 2012 so my children and I would always have somewhere to live. I also wanted my 3 grandchildren to be able to use the equity to purchase them a home. I named the property the Trust that I live in and invited my daughter, her partner and 2 children to come out of their HNZ home and live there. I made my daughter and I of my grandsons a Trustee. I made the 3 grandchildren the beneficiaries thinking the property doesn’t go to them until I am deceased. My daughters 2 children & my sons son. Things went well things were flowing. I retired in 2019 and moved to my partner family home out of town. My belief that my daughter and her now husband was left there as the Kaitiaki/Caregivers. There has been an understanding amongst this family group User pays meaning if you live there you maintain the repayments and the upkeep of the home. Things continued good and then hints of Meth being used on the property came to me and I tried to find evidence without success. Until one day my daughter changed all the locks to the property texting she will be removing anything that doesn’t belong to her from the house and inviting and housing who she wants there. My daughter has become a huge headache, ringing Real Estates to sell. My Lawyer is so light with his sharing. I believe if I was appropriately informed when setting up the Trust. The process plan would have been airtight. Now I could walk away with absolutely nothing and no homebase. Potentially Homeless and turning 70yrs.
Posted by Sandra Turei | October 10, 2021, 10:08 amThank you for sharing your story. Unfortunately many trusts are settled with the best of intentions but can become problematic if not managed appropriately with respect to the terms of the trust. Legal advice regarding options available to you is recommended.
Posted by vickiammundsen | October 10, 2021, 12:33 pmI have to remove an incapacitated trustee of a trust. The incapacitated trustee has a power of attorney. Am I required to provide notice to the power of attorney of the decision to remove the incapacitated trustee and do I need to include a Statutory Declaration and Medical Certificate to the Deed of Retirement of Trustee? Thank you
Posted by Sophia Careford | May 11, 2023, 3:47 pmThe form that the removal takes will depend on the terms of the trust. See the Trusts Act 2019, ss 92, 103, 104
Posted by vickiammundsen | May 11, 2023, 7:43 pm