As discussed in detail in our article probate of estates, the Court will normally appoint the person selected by the decedent in the Will or Trust to the role of Executor of the Estate. See our articles, Probate in California-The Basics and Duties of an Executor in California. But what happens if that person appointed fails to perform or actually violates the fiduciary duty to the Estate? Can that person be removed and who has the right to do so? That is the topic of this article.
The Basic Law:
Any interested person has the right to file a petition in the Probate Court seeking the removal of the fiduciary, be it Executor or Administrator, for cause. Indeed, the Court, on its own motion, may seek to remove the fiduciary. The Court has wide discretion as to whether removal is called for though the causes for such removal are listed in the statute.
California Probate code:
8502. A personal representative may be removed from office for any of the following causes:
(a) The personal representative has wasted, embezzled, mismanaged, or committed a fraud on the estate, or is about to do so.
(b) The personal representative is incapable of properly executing the duties of the office or is otherwise not qualified for appointment as personal representative.
(c) The personal representative has wrongfully neglected the estate, or has long neglected to perform any act as personal representative.
(d) Removal is otherwise necessary for protection of the estate or interested persons.
(e) Any other cause provided by statute.
Note how broad these categories are and they include not just the protection of the estate but also of interested persons that may include creditors of the estate, tenants in common with property owned by the estate, family members who are not direct heirs, etc.
Note also that it not only includes acts that were mismanagement or wrong doing has endangered the estate but acts, “…about to do so.” Thus, even before the act is taken, an interested party may seek relief in the court.
The fiduciary does have a right to respond and can be compelled to attend the court and be examined under oath. The procedure is set out in the Probate Code:
8500. (a) Any interested person may petition for removal of the personal representative from office. A petition for removal may be combined with a petition for appointment of a successor personal
representative under Article 7 (commencing with Section 8520). The petition shall state facts showing cause for removal.
(b) On a petition for removal, or if the court otherwise has reason to believe from the court's own knowledge or from other credible information, whether on the settlement of an account or otherwise, that there are grounds for removal, the court shall issue a citation to the personal representative to appear and show cause why the personal representative should not be removed. The court may suspend the powers of the personal representative and may make such orders as are necessary to deal with the property pending the hearing.
(c) Any interested person may appear at the hearing and file a written declaration showing that the personal representative should be removed or retained. The personal representative may demur to or
answer the declaration. The court may compel the attendance of the personal representative and may compel the personal representative to answer questions, on oath, concerning the administration of the
estate. Failure to attend or answer is cause for removal of the personal representative from office.
(d) The issues shall be heard and determined by the court. If the court is satisfied from the evidence that the citation has been duly served and cause for removal exists, the court shall remove the
personal representative from office.
Note that removal does not necessarily eliminate liability of the deposed fiduciary for damage that may have been caused to the Estate. Personal liability may remain and the new fiduciary may be under a duty to commence legal action against the old fiduciary for that damage.
The removal is, in effect, a mini trial before the Court in which testimony and declarations may be heard, the hearing requiring due notice to all interested persons and attorneys almost always representing the various parties.
Practicalities:
Errors in judgment are seldom convincing to the Court for removal of the fiduciary. The fiduciary is held to a prudent person criteria as to decisions involving care of assets and investments. See our article on Duties of an Executor. Thus, if you disagree with a particular stock purchase or the rental charged on a property, you are unlikely to find a judge willing to remove the fiduciary.
However, self dealing, embezzlement, conversion, nepotism and reckless disregard for protection of the assets can be grounds for removal. Typical examples of what can motivate a court are the retention of the fiduciary’s spouse to manage property at twice the going rate without any management duties being provided; loans to the fiduciary; use of funds by the fiduciary for his or her own business; investments in high risk ventures, etc. Failure to purchase adequate liability insurance or property insurance or neglect of property are other typical causes for the petition.
The burden of proof is certain on the party seeking to remove the fiduciary and most Courts are loath to remove them without truly obvious cause being demonstrated. Nevertheless, the interested party who fears the loss of the asset or has solid evidence of wrongdoing by the fiduciary is well advised to take immediate action and the Courts are there to provide relief. .