Common mistakes when changing trustee, and how to avoid them

The mistakes made when changing trustee are rarely dramatic. They are small omissions that surface months later: a bank that still treats the old trustee as the account holder, a decision nobody can prove was taken properly, a file that arrived incomplete. This page walks through the errors we see most often, explains why each one is costly and sets out the correction. For the full sequence, see changing trustee step by step.

The diagram below follows one typical error from beginning to end, so you can see how a small gap becomes a real problem.

Mistake one: starting without the trust deed

The most common error is acting before anyone has read the trust deed and its amendments. Families often assume that the settlor can simply replace the trustee, or that the beneficiaries can vote. Neither is automatically true. The deed decides who may remove a trustee, who may appoint a successor, whether a protector must consent and whether a court is needed.

Why it costs. A replacement made by someone without the power to make it can be challenged. The incoming trustee will not accept the role on a doubtful footing, and the outgoing trustee may refuse to hand over. You then restart the process with a longer list of problems.

How to avoid it. Gather the deed, every amendment and any letter of wishes before you approach anyone. Identify the person or body holding the power of appointment, and check whether reserved powers or a protector's consent alter the route. If the deed is silent or unclear, take that to a review before any document is signed. An independent review of the existing trust is the natural first step.

Mistake two: forgetting the bank

A trust is only as movable as its accounts. Every bank holding trust assets has its own onboarding file, its own signatory list and its own view of who the beneficial owner is. A change of trustee is, for the bank, a new customer relationship.

Why it costs. If the bank is approached last, it may need fresh identification of the new trustee, an updated description of the structure and fresh anti-money-laundering checks. During that time the old trustee may still be the only person who can instruct, and the assets sit in an awkward gap. Some banks also decline to continue the relationship at all.

How to avoid it. List every institution that holds trust property: banks, custodians, brokers, any holding companies and registrars. Speak to each one early about what it will require from the incoming trustee and from the deed of appointment. Ask for its checklist in writing. Our page on the trustee and the trust bank accounts explains what the bank looks at, and the documents to gather before changing trustee covers the paperwork side.

A related slip: ignoring the regulator's perspective

A trustee operating professionally in Switzerland is an authorised financial institution. The FINMA grants the authorisation, while day-to-day supervision is carried out by a supervisory organisation, itself authorised and overseen by the FINMA. Changes in the facts on which the authorisation rests must be reported to that organisation in advance. For you as a client, the practical lesson is to check that the incoming trustee is properly authorised before any assets move. The guide on what FINMA and SO-FIT approval means for you explains how to verify this.

Mistake three: no handover file

The outgoing trustee holds the memory of the trust: why past distributions were made, what was promised to whom, which tax filings were made and which are outstanding. If that knowledge does not travel, the new trustee starts blind.

Why it costs. Without a complete file the incoming trustee cannot do what the law expects of a trustee, which is to manage the separate assets, preserve their value and apply them for their intended purpose. It cannot do that for assets it has never fully catalogued. It also cannot answer a beneficiary who asks about earlier decisions, and a gap discovered after the transfer is far harder to close.

How to avoid it. Agree the contents of the handover file before the effective date, not after. It should include the deed and amendments, the register of assets, accounts and statements, correspondence with banks and advisers, records of distributions, any letters of wishes and the compliance file. Treat it as a deliverable with a named owner and a date. The handover file from the outgoing trustee lists what a complete one looks like.

Mistake four: no minutes of the decision

Replacing a trustee is a decision with consequences for every beneficiary. Yet it is often taken in a conversation, confirmed by email and never written up.

Why it costs. When a beneficiary later asks why the trustee was changed, who agreed and on what information, there is nothing to show. In a dispute, the absence of a record makes it harder to demonstrate that the decision was taken in good faith and for the right reasons. It also leaves the incoming trustee unsure what the settlor or protector actually approved.

How to avoid it. Keep a short written record: what was decided, by whom, on what date, what alternatives were considered and what information the decision-makers had. Attach the signed deed of retirement and appointment and any consents. This does not need to be long. It needs to exist and to be stored with the trust records. The case of an independent review revealing missing minutes shows how such a gap is found years later.

Other slips worth knowing

Checklist before you sign

• Read the trust deed and every amendment
• Identify who holds the power to remove and appoint a trustee
• Check whether the protector must consent
• List every bank, custodian and holding company
• Ask each institution for its requirements in writing
• Verify the incoming trustee's authorisation and supervisory organisation
• Agree the contents and date of the handover file
• Record the decision, with reasons, in written minutes
• Decide how and when beneficiaries are informed

If your situation is more urgent, for instance a trustee who no longer responds, replacing a failing trustee covers the faster route.