Power to Replace a Trustee Can Produce Adverse Tax Results

Written by Hollis F. Russell and Dana W. Hiscock , in 1991

Many estate plans contain long-term trusts in which an independent trustee, such as a bank or trust company, plays a pivotal role. Over the course of any trust administration, however, the relationship between trust beneficiary and trustee, for a variety of reasons, may become strained or unworkable. The trustee may exercise more control or make decisions contrary to family desires, or may simply not perform satisfactorily. Accordingly, many testators prefer to establish a mechanism, in the event of a falling out between trustee and beneficiaries, for the appointment of a replacement trustee thought to be more compatible with the family.