Being an independent trustee might initially seem like a straightforward role - helping out a friend or stepping in as a neutral party to manage a trust. However, when it comes time to step down, many trustees quickly learn that resigning isn't as simple as handing in a resignation letter.
Resigning as a trustee involves several legal steps outlined in the Trusts Act 2019, and the process can get complicated if you don’t follow the correct procedures. Here’s what you need to know:
- Agreement with Co-Trustees: Typically, you can retire if all co-trustees agree. However, if there’s resistance, stepping down becomes trickier. If your fellow trustees don’t share your view or agree with your resignation, resolving the issue may require legal intervention.
- Retirement by Deed: If the trust deed allows, you may resign through a formal deed of retirement. This procedure ensures that your resignation is legally binding. It’s not just about signing a document—you’ll need the approval of the remaining trustees, and usually there has to be one corporate or two personal trustees left in place. If the number of trustees drop below this then a new trustee would need to be appointed when you retire.
- Court Approval: In situations where co-trustees won’t cooperate, you may need to apply to the court for permission to resign. While this is a legal option, it can be time-consuming and costly.
- Liabilities Don’t Disappear: Even after stepping down, you remain liable for any actions or decisions made during your tenure as trustee. If there were any issues while you were managing the trust, you could still be held accountable.
- Replacement Trustee: Often, you can’t simply leave the trust without someone to take your place. If the remaining trustees can’t agree on a replacement, the court may need to appoint one.
While resigning as a trustee might sound easy, it requires careful attention to legal requirements. If you’re facing a complicated resignation, Godfreys Law can guide you through the process, ensuring that your exit is handled professionally and legally, protecting both your interests and those of the trust and its beneficiaries.
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