Powered by People


Articles and Legal News

Please note all of our news and articles are for general information purposes only and do not constitute legal advice. For advice tailored to your circumstances please contact your Saunders & Co lawyer. As well as providing regular news updates on the feed adjacent, we also provide a personalised news email service. To choose what news we send you, click here.

Can I remove a trustee from my family trust?

Family Trusts – Removing a Trustee

A trustee of a discretionary family trust cannot just be removed at the wave of a hand. In fact, settlors (those that establish the trust originally) must be careful that they don’t appear to just be getting rid of those trustees that stick their heads above the parapet, such as when perhaps trying to stop the settlor from advancing their own financial gains above the interest of the beneficiaries.

So how can trustees legitimately be removed?

Other than the mechanisms for removal of trustee in the trust deed itself, the Trustee Act contains the legitimate reasons for a trustee’s removal.

Under section 43, in addition to the powers contained in the trust deed itself, the person nominated by the trust deed to appoint new trustees may appoint a replacement trustee where an existing trustee:

  • has died;
  • is out of the country for more than 12 months and they have not used their powers as trustee;
  • wants to be discharged;
  • refuses to act as trustee;
  • is deemed unfit or unable to act as a trustee;
  • is a corporation that has gone into liquidation, has ceased to carry on business, or is dissolved.

Under section 51, the Court may replace a trustee where the trustee:

  • has committed misconduct in the administration of the Trust;
  • has been convicted of a crime involving dishonesty;
  • is mentally disordered or whose estate is subject to a property order;
  • is bankrupt;
  • is a corporation that has gone into liquidation, has ceased to carry on business or, is dissolved.

Therefore, a trustee who is merely trying to act in the trust’s best interests but perhaps in opposition to a dictator settlor cannot just be given the bump.

The Court also has a general discretion to remove and appoint trustees where to do so is in the best interests of the trust (for instance where there are irreconcilable disputes among trustees or a conflict of interest between trustees and beneficiaries). However, if an application has to be made to the Court to resolve a dispute, this is expensive, time consuming and the Court may order an outcome that was not intended by those bringing the application. Thus it is best to avoid this if possible.

A trustee may also retire by way of Deed of Retirement with the consent of co-trustees and those with the power of appointment and removal. However, those involved must also remember that simply entering a Deed to remove a trustee is not enough to remove that trustee from the trust completely. Trustees hold property in their names – not in the trust’s name; therefore, the appropriate processes and documentation must be entered in order to have the retiring trustee’s name removed from such things as the Certificate of Title to the property, insurance certificates, and any guarantees and lending. Any new trustee must also have their name added to such documents.

We recommend that if you are dealing with trustee issues or want your Trust Deed reviewed to ensure it provides appropriate mechanisms for the removal and appointment of trustees, you get in touch with your Saunders & Co legal advisor.

"Through this time we have required the services of the firm for business, personal, and litigation purposes. We have never felt a moment's hesitation in remaining with the firm, and expect to continue a long and prosperous relationship with Saunders & Co. into the future."

Colin and Julie Erickson, Cube Developments Limited

"Excellent law firm to deal with. Excellent communication and service."

Carmel Kokshoorn, Property Owner

"Thanks Hornby Law for your professional and helpful advice. It is nice when everything runs smoothly."

Barry and Natalie Gibb

"We have found them reliable, timely and professional. They have added value to our business by being effective and decisive. Their friendly manner whilst conducting business means that we have felt comfortable seeking their advice no matter how major or minor the query may be. We would have no hesitation in recommending Saunders & Co to family, friends and business associates."

Cymon and Angela Allfrey, Cymon Allfrey Architects Ltd

"Very prompt and efficient service. I have been very well informed and kept up to date on matters. To be recommended. Thank you."

Suzanne Henderson, Property

"The professional and friendly service provided by Jenni Hunter allowed us to buy our first home without fuss stress or delays, absolutely seamless! Amenable, and more importantly always accessible to clarify and assist, Jenni proved you can get an exclusive personal service without paying Auckland barrister prices."

James Craig, Home Buyer

"Always happy with service and professionalism at Hornby Law. Never had any reason or desire to change firms; friendly, welcoming, professional and easy to do business with."

Frans and Rose-Marie van Zoggel

"Thank you Ria and your team for the excellent work in completing the sale on such a short turnaround, that's why I always use Saunders & Co."

Ashley Patten, Property Owner

"I have worked with Saunders & Co on both a professional and personal basis for over 10 years. I have always found their service and quality of legal advice to be first rate. Attention to detail and timeliness is important to our business, and Saunders & Co have always performed in these critical areas."

Ian McNabb, Ngai Tahu Property Limited