There may come a time where beneficiaries believe that a trustee/trustees, for various reasons, are not fulfilling their fiduciary duties. It is important to look at the trust deed first to establish if exit strategies have been put in place but where serious disputes do arise and settlement negotiations fail or where a trustee refuses to resign, there may be no other alternative than the forcible removal of the trustee.
There are several remedies for removing trustees from a business trust, assuming they fall within the regulations contained in the Trust Property Control Act 57 of 1988 and that the removal of trustee(s) will ultimately be in the best interests of the trust and its beneficiaries.
In terms of the Act, Section 20 provides that a trustee may be removed by a competent court on application by the Master of the High Court or another person who has a vested interest in the trust property (i.e. a beneficiary) if any of the following circumstances are present:
Further to these statutory requirements, the trust deed can stipulate other, more stringent conditions or circumstances where a trustee may be removed and it is therefore important when creating a trust to consider a wide variety of potential solutions that are available to protect the beneficiaries and the ability of the trust to give effect to its purpose. It would also be wise to include a dispute resolution mechanism i.e. mediation / arbitration in the trust deed that disaffected parties can rely on.
It’s advisable to seek legal advice when preparing your trust deed and certainly before pursuing any action to initiate the removal of trustees.