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Fiduciary Liability-Removal of Trustee Under the Ohio Trust Code

January 22, 2017, by Daniel McGowan, on New Probate & Trust Cases |

Ohio Revised Code Section 5807.06 is Ohio's version of Uniform Trust Code § 706. Although the entire uniform section was not adopted, the Ohio “serious breach of trust” reason for removal of a trustee is the same as the uniform code. The official comment to the 2006 version of the Uniform Code states:

[N]ot every breach of trust justifies removal of the trustee. The breach must be “serious.” A serious breach of trust may consist of a single act that causes significant harm or involves flagrant misconduct. A serious breach of trust may also consist of a series of smaller breaches, none of which individually justify removal when considered alone, but which do so when considered together. A particularly appropriate circumstance justifying removal of the trustee is a serious breach of the trustee's duty to keep the beneficiaries reasonably informed of the administration of the trust or to comply with a beneficiary's request for information as required by Section 813. Failure to comply with this duty may make it impossible for the beneficiaries to protect their interests. It may also mask more serious violations by the trustee.

A recent case from Montgomery County, Kidd v. Alfano, 64 N.E.3d 1052 (2016) involved the trial court's conclusion that the trustees of a trust breached their fiduciary duty by making an advancement to a beneficiary for her personal benefit.  The trial court concluded that based on this single breach of duty, removal of the trustees was not warranted. In the probate code, under R.C. 2109.24, removal of a trustee is discretionary when “the interest of the trust demands it,” a fact recognized by this district and others: “The court's order removing a trustee is made in its sound discretion, and absent a clear abuse of that discretion will not be reversed by a reviewing court.”

The point is that not every technical breach of fiduciary duty will warrant removal under the Ohio Trust Code.