Where there is a clear conflict between co-trustees, such that they cannot work together and their strained relationship creates a stalemate concerning the management of trust property, such inaction may constitute grounds for removal of the co-trustees. Hostility and lack of cooperation affects the trust estate by hampering the administration of the trust and warrants removal.
1. Generally Applicable Legal Principles
A probate court has broad equitable powers to supervise the administration of a trust and an estate. The court has the responsibility “to protect the estate and ensure its assets are properly protected for the beneficiaries.” (Estate of Ferber (1998) 66 Cal.App.4th 244, 253.) The court has the inherent equitable power to “take remedial action” and to ” ‘intervene to prevent or rectify abuses of a trustee’s powers.’ ” (Schwartz v. Labow (2008) 164 Cal.App.4th 417, 427.)
As part of these broad powers, a probate court has the authority to remove a trustee based on a party’s motion or on its own motion. (Prob. Code, § 15642, subd. (a).)3 The Legislature has identified several specific grounds to remove a trustee, including the trustee’s breach of trust, failure to act, and hostility or lack of cooperation between cotrustees that impairs the administration of the trust. (§ 15642, subd. (b).) These grounds for removal are not exclusive; the court may remove the trustee for any other good cause, including to protect trust assets. (§ 15642, subd. (b)(9); Estate of Ferber, supra, 66 Cal.App.4th at p. 253.)
A trial court has broad discretion in determining whether to remove a trustee. (Estate of Gilmaker (1962) 57 Cal.2d 627, 633 (Gilmaker).) “But this is a power that the court should not lightly exercise, and whether or not such action should be taken . . . rests largely in the discretion of the trial court. Furthermore, the court will not ordinarily remove a Trustee appointed by the creator of the trust.” (Estate of Bixby (1961) 55 Cal.2d 819, 826.) However, the court may remove the selected trustee if the best interests of the trust require such action. (See Estate of Wemyss (1975) 49 Cal.App.3d 53, 61.) Discretion is abused only when the trial court ” ‘exceeds the bounds of reason, all of the circumstances before it being considered.’ ” (Denham v. Superior Court (1970) 2 Cal.3d 557, 566; In re Marriage of Berland (1989) 215 Cal.App.3d 1257, 1261-1262.) In reviewing the factual determinations underlying the trial court’s exercise of its discretion, the appellate court applies the substantial evidence test. (See Adoption of Matthew B. (1991) 232 Cal.App.3d 1239,1254.)
“Hostility, antagonism and inevitable future conflict can justify the removal of the trustee when those factors impair the proper administration of the trust.” (Copley v. Copley (1981) 126 Cal.App.3d 248, 288; § 15642, subd. (b)(3).) “The purpose of removing a trustee is not to inflict a penalty for past action, but to preserve the trust assets. [Citation.] ‘The question in each case is whether the circumstances are such that the continuance of the trustee in office would be detrimental to the trust.’ ” (Getty v.Getty (1988) 205 Cal.App.3d 134, 139-140.)
2. Duties to Preserve and Make Trust Assets Productive
A trial court may find that a trustee has breached his or her duties to the trust by allowing the trust real property to remain unproductive and become a liability to the estate because of its state of disrepair and past due property taxes.
“A trustee’s basic duties relate to management of the trust property. A trustee must preserve trust property and make it productive. (§§ 16006, 16007.) . . . In discharging these duties, a trustee must use ‘reasonable care, skill, and caution’ (§ 16040, subd. (a)) and ‘invest and manage trust assets as a prudent investor would . . . .’ (§ 16047, subd. (a).) In brief, the trustee’s fundamental duty is to use due care to protect the trust property.” (Moeller v. Superior Court (1997) 16 Cal.4th 1124, 1132; § 16040.) A trustee’s violation of these duties constitutes a breach of trust. (§ 16400.)