What is a Substitution of Trustee?

Mary McMahon
Mary McMahon

A substitution of trustee is a legal document filed when it is necessary to change a trustee. Two common situations where such a document can come up can be seen in the real estate industry and in the management of private trusts. In real estate, a trustee is appointed by a lender so in the event that a property needs to be foreclosed, the trustee can take charge of arranging the sale and forwarding the proceeds to the lender. With private trusts, trustees are appointed to manage the assets in the trust and distribute them as directed under the terms of the trust.

A substitution of trustee allows a secondary trustee to take over the duties of the original trustee.
A substitution of trustee allows a secondary trustee to take over the duties of the original trustee.

In many cases, when a trustee is appointed, a secondary trustee is named in the documents filed at the time. This person is named to take over in the event that the original trustee becomes unable or unwilling to do the job. If the secondary trustee needs to step up to assume duties, a substitution of trustee will be filed to formalize the change. Beneficiaries can also appoint an entirely new trustee to take over.

In many cases, when a trustee is appointed, a secondary trustee is named in the documents filed at the time.
In many cases, when a trustee is appointed, a secondary trustee is named in the documents filed at the time.

This document must be filled out completely and submitted to the clerk or recorder in the region where the original legal documents are filed. In the United States, for example, the county clerk in the county where the deed of trust and other matters relating to a real estate sale were filed would need to receive the substitution of trustee document. Notices must also be sent to people with an interest in the trust, such as a landlord's tenants.

Blank forms that people can fill out are sometimes available from government offices and they can also be found in books of legal forms. A lawyer can also draw up a substitution of trustee for people who need one. It is important to use a document that has been prepared or reviewed and approved by an attorney to confirm that all of the necessary information is present. If there are errors in the document, they can be used to challenge the validity of the document and may create problems in the future. People who are in doubt should consult an attorney to confirm that the form is correctly filled out.

The information on such documents enters the public record and anyone may look it up. People who are acting as trustees should be aware that they can be relieved of their positions if the beneficiary or a concerned party suspects that the trustee is not representing the beneficiary's best interests.

Mary McMahon
Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a wiseGEEK researcher and writer. Mary has a liberal arts degree from Goddard College and spends her free time reading, cooking, and exploring the great outdoors.

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Discussion Comments


First of all, it never was their home, but removing a human from their shelter must be a grievous assignment. Being in loss mitigation for seven years gives me the insight that most people who are foreclosed upon do not have the savvy or tact or resources to understand their financial situation past any type of simple understanding and thus never should have been given a massive loan to pay back or should have signed up for it in the first place.

Most people who are foreclosed upon (but not all) are uneducated, lower socioeconomic types from a long lineage of lower class, uneducated ancestry. The ethnicity of this group of people is even, except for Asians, who are very much more responsible about their financial obligations.

Since the people affected by the financial college pipeline sharks who work for the lenders or as brokers are mostly underclass, they were defenseless to stand up for themselves or just did not know how to. The jobs going overseas which helped most people pay for their mortgages which cost up to 50 percent of their monthly income, didn't just go overseas; they disappeared completely. But that is not the lender’s fault. It is an unfortunate situation that must be taken on and handled by the borrowers themselves. Today’s society does not believe in self reliance and needs always to point the finger of blame at someone or something else. It sickens me to think that my tax dollars go to help these irresponsible borrowers or the irresponsible, greedy lenders with modification programs.

A 2011 survey on FNMA borrowers showed that the average education level of a FNMA borrower was 14 years old (pre high school). The default rate on loans converted to modifications of existing mortgages was 70 percent for the first mod or trial payment in 2011.


@Azuza - I see what you're saying, but I don't think there is any reason to vilify bank trustees! Someone has to be responsible for handling the sale of a foreclosed property. I'm sure the trustee has nothing to do with deciding what property gets foreclosed on or anything like that.

I also wanted to mention that if you are appointing a trustee to manage assets that are in a trust, be careful. Very few people will manage other people's assets like they are their own, you know? It's hard to know if people are trustworthy sometimes!


I bet bank appointed trustees have had their work cut out for them the last few years! I know the rate of foreclosure in this country has been extremely high since the recession hit.

I know it's just a job, but I think I would feel bad acting as a trustee for a foreclosed property. A lot of people have been foreclosed on due to circumstances beyond their control. I don't think I would want any part in the process of throwing someone out of their home.

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