Tennessee § 35-15-704 - Vacancy in trusteeship — Appointment of successor.

§ 35-15-704. Vacancy in trusteeship — Appointment of successor.

A vacancy in a trusteeship occurs if: A person designated as trustee rejects the trusteeship; A person designated as trustee cannot be identified or does not exist; A trustee resigns; A trustee is disqualified or removed; A trustee dies; or A conservator is appointed for an individual serving as trustee. If one (1) or more cotrustees remain in office, a vacancy in a trusteeship need not be filled. A vacancy in a trusteeship must be filled if the trust has no remaining trustee. A vacancy in a trusteeship of a noncharitable trust that is required to be filled must be filled in the following order of priority: By a person designated in the terms of the trust to act as successor trustee; By a person appointed by unanimous agreement of the qualified beneficiaries; or By a person appointed by the court. A vacancy in a trusteeship of a charitable trust that is required to be filled must be filled in the following order of priority: By a person designated in the terms of the trust to act as successor trustee; By a person selected by the charitable organizations expressly designated to receive distributions under the terms of the trust if the attorney general does not affirmatively object within thirty (30) days of receipt of notice of the person selected; or By a person appointed by the court. Whether or not a vacancy in a trusteeship exists or is required to be filled, the court may appoint an additional trustee or special fiduciary whenever the court considers the appointment necessary for the administration of the trust. Acts 2004, ch. 537, § 54; 2007, ch. 24, § 26. Textbooks. Tennessee Jurisprudence., 6 Tenn. Juris., Charities, §§ 5, 9. Section Comment. Unless provided otherwise hereinafter, any reference to “section,” “subsection” or “subdivision” means all, or such portion of, T.C.A. § 35-15-704 . This section lists the ways in which a trusteeship becomes vacant and the rules on filling the vacancy. See also T.C.A. § 35-15-701 (accepting or declining trusteeship), T.C.A. § 35-15-705 (resignation) , and T.C.A. § 35-15-706 (removal) . Good drafting practice suggests that the terms of the trust deal expressly with the problem of vacancies, naming successors and specifying the procedure for filling vacancies. This section applies only if the terms of the trust fail to specify a procedure. The disqualification of a trustee referred to in subdivision (a)(4) would include a financial institution whose right to engage in trust business has been revoked or removed. Such disqualification might also occur if the trust's principal place of administration is transferred to a jurisdiction in which the trustee, whether an individual or institution, is not qualified to act. Subsection (b) provides that a vacancy in the cotrusteeship must be filled only if the trust has no remaining trustee. If a vacancy in the cotrusteeship is not filled, T.C.A. § 35-15-703 authorizes the remaining cotrustees to continue to administer the trust. However, as provided in subsection (e), the court, exercising its inherent equity authority, may al-ways appoint additional trustees if the appointment would promote better administration of the trust. See Restatement (Third) of Trusts § 34 cmt. e (Tentative Draft No. 2, approved 1999); Restatement (Second) of Trusts § 108 cmt. e (1959). Subsection (c) provides a procedure for filling a vacancy in the trusteeship of a noncharitable trust. Absent an effective provision in the terms of the trust, subdivision (c)(2) permits a vacancy in the trusteeship to be filled, without the need for court approval, by a person selected by unanimous agreement of the qualified beneficiaries. An effective provision in the terms of the trust for the designation of a successor trustee includes a procedure under which the successor trustee is selected by a person designated in those terms. Pursuant to T.C.A. § 35-15-705 , the qualified beneficiaries may also receive the trustee's resignation. If a trustee resigns following notice as provided in T.C.A. § 35-15-705 , the trust may be transferred to a successor appointed pursuant to subdivision (c)(2) of this section, all without court involvement. Unlike with the Uniform Trust Code, only a qualified (and not any nonqualified) beneficiary who is displeased with the choice of the qualified beneficiaries may petition the court for removal of the trustee under T.C.A. § 35-15-706 . Under such section, a settlor or cotrustee may also so petition for removal If the qualified beneficiaries fail to make an appointment, subdivision (c)(3) authorizes the court to fill the vacancy. In making the appointment, the court should consider the objectives and probable intention of the settlor, the promotion of the proper administration of the trust, and the interests and wishes of the beneficiaries. See Restatement (Third) of Trusts § 34 cmt. f (Tentative Draft No. 2, approved 1999); Restatement (Second) of Trusts § 108 cmt. d (1959). Subsection (d) specifies a procedure for filling a vacancy in the trusteeship of a charitable trust. Absent an effective designation in the terms of the trusts, a successor trustee may be selected by the charitable organizations expressly designated to receive distributions in the terms of the trusts if the attorney general does not affirmatively object within thirty days of receipt of the notice of the person selected. This is a different procedure than under the Uniform Trust Code, which requires the attorney general to actively concur. If the attorney general objects within the specified time frame, or if the trust does not designate a charitable organization to receive distributions, the vacancy may be filled only by a court. In the case of a revocable trust, the appointment of a successor will normally be made directly by the settlor. As to the duties of a successor trustee with respect to the actions of a predecessor, see T.C.A. § 35-15-812 .