Hi there. There are several ways to remove and replace a trustee. The first way is via the trust instrument or deed for the family trust. This is the document that establishes the trust, specifies the trust property, and outlines the trustee’s obligations. It will also usually set out the procedure to be followed by the beneficiaries to remove the trustee and appoint a replacement. If the trust instrument does not set out the process, the beneficiaries can make an application to a court for assistance with removing the trustee. A court may replace the trustee if it is necessary to protect the beneficiaries and secure the trust assets.

However, replacing the trustee now may have no bearing on whether the bank can make a claim to the family trust assets under the fixed and floating charge. This is because the charge was created at a time when the two trusts shared a corporate trustee and, at least according to the bank’s line of reasoning, the property of ‘the trust’ included both trusts’ assets. Disconnecting the two trusts after the charge has crystallised by replacing the trustee of the family trust may not be sufficient to stop the bank from claiming the assets of this trust as well as the unit trust. Whether the bank can successfully make this claim will depend on the meaning the words ‘the trust’ in the context of the trust instruments, the charge documentation and the conduct of the parties at the time of creating the charge and since then.