Referree holding red cardIn California trust administrations, the trustee is in the driver’s seat. The trustee marshals the assets, deals with creditors, and (except in the case of ongoing trusts) gets them distributed out to the beneficiaries in fractional shares per the terms of the trust. But what happens when the trustee favors himself as a beneficiary, disfavors a family member he/she dislikes, or simply falls asleep at the wheel?

As illustrated by the Donald Sterling case recently discussed here, petitions to remove trustees are common in California trust litigation. Courts will suspend or remove trustees if the petitioner provides sufficient evidence that removal is necessary to protect the beneficiaries. This post will discuss trustee removal under California law from the beneficiary’s perspective. With apologies to The Sound of Music, “how do you solve a problem like trustee-a?”

The California Court of Appeal blocked Donald Sterling’s last second shot at undoing the sale of the Los Angeles Clippers. Donald sought to overturn the results of an eight day trial that occurred in July 2014. The opinion, issued on November 16, 2015, should be of interest to settlors, trustees, and beneficiaries of “ordinary” trusts in California that do not hold a $2 billion NBA franchise.

The Court of Appeal hammered Donald for procedural deficiencies with his appellate briefs before ruling against Donald on all three issues on appeal. The court held that: (1) Donald was properly removed as trustee on the basis of his incapacity; (2) the trial court appropriately allowed the sale of the Clippers despite the pending appeal; and (3) Donald’s effort to revoke his trust was ineffective to stop the sale of the Clippers.