Print Friendly SENATE BILL NO. 1025 – Trustee, remove/replace
SENATE BILL NO. 1025
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S1025.......................................by COMMERCE AND HUMAN RESOURCES
TRUSTEES - Adds to existing law to provide for the removal and replacement
of a trustee for cause; and to provide for an award of attorney's fees and
01/21 Senate intro - 1st rdg - to printing
01/22 Rpt prt - to Com/HuRes
|||| LEGISLATURE OF THE STATE OF IDAHO ||||
Fifty-fifth Legislature First Regular Session - 1999
IN THE SENATE
SENATE BILL NO. 1025
BY COMMERCE AND HUMAN RESOURCES COMMITTEE
1 AN ACT
2 RELATING TO TRUSTS; AMENDING PART 3, CHAPTER 7, TITLE 15, IDAHO CODE, BY THE
3 ADDITION OF A NEW SECTION 15-7-308, IDAHO CODE, TO PROVIDE FOR REMOVAL AND
4 REPLACEMENT OF A TRUSTEE FOR CAUSE, TO PROVIDE THE CAUSES FOR REMOVAL, TO
5 PROVIDE FOR REPLACEMENT OF THE TRUSTEE, TO PROVIDE FOR REMOVAL WITHOUT
6 JUDICIAL INTERVENTION, TO PROVIDE WHEN JUDICIAL ACTION MAY BE INVOKED AND
7 TO PROVIDE FOR APPLICATION OF THE SECTION; AND AMENDING PART 3, CHAPTER 7,
8 TITLE 15, IDAHO CODE, BY THE ADDITION OF A NEW SECTION 15-7-309, IDAHO
9 CODE, TO PROVIDE FOR AN AWARD OF ATTORNEY'S FEES AND COSTS.
10 Be It Enacted by the Legislature of the State of Idaho:
11 SECTION 1. That Part 3, Chapter 7, Title 15, Idaho Code, be, and the same
12 is hereby amended by the addition thereto of a NEW SECTION , to be
13 known and designated as Section 15-7-308, Idaho Code, and to read as follows:
14 15-7-308. REMOVAL AND REPLACEMENT OF TRUSTEE. (1) Any settlor, cotrustee
15 or beneficiary of a trust shall have the right to remove and replace a trustee
16 for cause by maintaining a proceeding under section 15-7-201, Idaho Code.
17 (2) In any proceeding under section 15-7-201, Idaho Code, a trustee may
18 be removed for cause by the court on its own motion.
19 (3) Cause for removal shall include, but is not limited to, the follow-
21 (a) The trustee fails or declines to act;
22 (b) The trustee commits any breach of trust or breach of fiduciary duty;
23 (c) The trustee is unfit to administer the trust;
24 (d) Hostility exists between cotrustees or between the trustee(s) and the
25 beneficiaries which impairs the administration of the trust;
26 (e) Trust property or the interests of the beneficiaries may suffer loss
27 or injury if the trustee is not removed; or
28 (f) Other good cause as determined in the discretion of the court.
29 (4) Any trustee removed under this section shall be replaced in accor-
30 dance with the trust instrument. Provided, when the trust instrument fails to
31 name or otherwise provide for appointment of a successor trustee, any settlor,
32 cotrustee or beneficiary may nominate a successor trustee to act upon appoint-
33 ment by the court in a proceeding under section 15-7-201, Idaho Code.
34 (5) The right to remove and replace a trustee for cause under this sec-
35 tion may be exercised free of judicial intervention and without court order,
36 approval or other action of any court, upon the unanimous consent of all bene-
37 ficiaries of the trust, subject to the jurisdiction of the court as invoked by
38 interested parties or as otherwise exercised as provided by law. Notice of
39 removal and replacement shall be given by the beneficiaries to the trustee by
40 any method permitted under section 15-1-401, Idaho Code.
41 (6) This section shall not limit the right of any settlor, cotrustee or
42 beneficiary to remove a trustee in accordance with the trust instrument.
43 (7) This section shall apply to all trustees subject to the jurisdiction
1 of an Idaho court under section 5-514, Idaho Code, or chapter 7, title 15,
2 Idaho Code.
3 SECTION 2. That Part 3, Chapter 7, Title 15, Idaho Code, be, and the same
4 is hereby amended by the addition thereto of a NEW SECTION , to be
5 known and designated as Section 15-7-309, Idaho Code, and to read as follows:
6 15-7-309. ATTORNEY'S FEES IN TRUSTEE REMOVAL PROCEEDINGS. (1) In any pro-
7 ceeding under section 15-7-201 or 15-7-308, Idaho Code, to remove and replace
8 a trustee, the court shall award attorney's fees and costs to the prevailing
9 party, together with attorney's fees and costs on appeal and postjudgment
10 attorney's fees and costs incurred in attempting to collect on the judgment.
11 (2) Any attorney's fees and costs awarded against the trustee shall be
12 paid from the personal funds of the trustee and not from the trust estate.
13 (3) When the trustee unsuccessfully resists removal in any proceeding
14 under section 15-7-201 or 15-7-308, Idaho Code, the court shall order the
15 trustee to reimburse the trust estate for any attorney's fees and costs
16 charged to the trust estate by the trustee, with payment to be made from the
17 personal funds of the trustee. Any such amount shall become a final judgment
18 awarded to the trust against the trustee, and the court shall award attorney's
19 fees and costs to the trust on appeal together with postjudgment attorney's
20 fees and costs incurred in attempting to collect on the judgment.
STATEMENT OF PURPOSE
The purpose of this legislation is to provide a
statutory framework for the removal and replacement of the
trustee of a trust "for cause". Current Idaho law does not
set forth the "for cause" grounds for removal, and simply
provides the court with jurisdiction for such actions. The
proposal sets forth a specific mechanism for the removal
authority currently granted to the court by I.C. 15-7-201.
The proposal codifies the common law grounds for removal,
and provides for the use of the existing procedures of the
Uniform Probate Code as adopted in Idaho. The proposal
further provides for the appointment of a replacement
trustee, and establishes that the settlor of the trust has
standing in such matters. The proposal also provides for
the award of attorney's fees and costs to the prevailing
party in a removal dispute.
With more and more wealth passing by trust document
then by testamentary transfer, it is important that
Idaho's trust law protect the provisions of the trust
document, the intent of the settlor, and the rights of the
Contact: Freeman B. Duncan
Idaho Trust Company
STATEMENT OF PURPOSE/FISCAL NOTE S1025