In the Matter of the Gloria T. Mann Revocable Trust

On June 2, 2021, the New Jersey Appellate Division (DOCKET NO. A-2663-19; Judge Moynihan) upheld the judgment of the trial court in holding that a trustee resigned his office when he executed a written “Resignation of Trustee”.

The trustee argued that he only delegated his authority to the other co-trustee, and that the “Resignation of Trustee” was only signed to convince a local bank to work with the remaining trustee. The trustee further argued his resignation was ineffective because it did not comply with New Jersey law.

N.J.S.A. 3B:31-50(a) provides:

a. A trustee may resign: (1) upon at least 30 days’ notice to the qualified beneficiaries, the settlor, if living, all co-trustees, and the trustee or trustees, if any, designated pursuant to the terms of the trust to succeed the resigning trustee; or (2) with the approval of the court.

b. In approving a resignation, the court may issue orders and impose conditions reasonably necessary for the protection of the trust property.

c. Any liability of a resigning trustee or of any sureties on the trustee’s bond for acts or omissions of the trustee is not discharged or affected by the trustee’s resignation.

“The general rule is that a trustee, having accepted a trust, may not through his own act alone divest himself of the office or its responsibilities […] in the absence of the [approval of the court or the] consent of the beneficiaries.” In re Loree’s Tr. Est., N.J. Super. 604, 609 (Ch. Div. 1953) (the trust instrument was silent on trustee resignation). However, the court must also consider the intent of the settlor and give effect to provisions within the trust instrument that contemplate trustee resignation. See Zwoyer v. Hackensack Tr. Co., 61 N.J. Super. 9, 12, 16 (App. Div. 1960).

“If the settlor addressed the issue of trustee resignation in the trust document, then the express terms of the trust prevail over N.J.S.A. 3B:31-50(a)’s default resignation requirements.”

In this recent case, the trust instrument provided a mechanism whereby trustees could resign. This mechanism was followed and the resignation was deemed effective and final.