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Can A Beneficiary Stop The Sale Of A Property?

Probate Litigation Attorney

Can a Beneficiary Stop the Sale of a Property?

Can a trustee sell trust property? A trust is a contract between two parties that commits one to keep the legal title to the other’s assets and oversee them for the benefit of the owner and any designated beneficiaries. Depending on the trust instrument, the trustee will have several responsibilities. These may include a clause permitting them to sell the properties in trust. In all cases, trustees have a fiduciary duty to beneficiaries, which means their actions should be in the beneficiaries’ best interest.

Therefore, whether or not a trust contract allows for the sale of a property, it is always advisable to consult with a seasoned trust lawyer who knows the field and has experience guiding trustees and beneficiaries through the complex world of trust law. We’ll gladly provide our services if you need help with a trustee selling property.

Trust law is intricate. Selling real estate owned by a trust always presents problems. Here, we clarify a few points.

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Probate Attorney

Can a Beneficiary Stop the Sale of a Property?

Can a trustee sell trust property?

The trust agreement will determine whether a trustee is allowed to sell trust property or not.

When a trustee may sell a property

If the trust instrument outlines one of the trustees’ responsibilities as selling real estate, then the entity or individual has the power to sell trust properties. If you’re unsure whether your trustee is allowed this authority, speak with an attorney. A trustee acts in a fiduciary capacity when they sell properties on a trust’s behalf. They should act in good faith and follow the trust instrument and state laws that outline their power to sell a trust-owned property. To ensure that nothing is ignored or omitted, strict record-keeping is necessary when selling trust property.

How Do Trustees Carry Out the Sale of Trust Property?

Usually, trustees conduct sales like any other property seller. However, they take additional steps to achieve a smooth process. These include determining whether the property is under a trust or owned by an individual. The latter usually requires no particular action. On the other hand, if the property is trust-owned, the trustee will have to produce a copy of the trust certificate to prove they indeed are authorized to conduct the sale.

The trustee should follow the instructions if the trust agreement specifies that the offers should be made public or that at least two distinct valuations should be obtained before accepting an offer. Trustees, however, can employ an open market bid process, which entails advertising the trust property and soliciting offers from possible buyers if the trust instrument does not specify how to conduct sales.

When a trustee may not sell a trustee-owned property

If the trust agreement forbids it, a trustee shouldn’t sell trust property since doing so would violate their fiduciary obligations and put them at risk of legal action.

Can a beneficiary stop the sale of trust property?

No. Put simply, beneficiaries don’t have the authority to stop the sale of trust property if a trust instrument authorizes it, which they don’t like since it’s their source of income. But there are certain ambiguities, as is always with many things relating to inheritances and how they are handled.

The beneficiary’s role

Beneficiaries are individuals qualified to receive capital asset distributions from trusts. Therefore, even when they receive the proceeds from some assets, unless they are named as trustees, they have little control over how the property is sold, especially if the trust instrument already specifies property sales instructions.

The trustees’ role

The entity in charge of property sales could be the trustee. Typically, a trustee is chosen to manage a decedent’s trust. This individual should carry out the desires of the decedent for the benefit of the beneficiaries. The trustee is appointed by the person who creates the trust.

It is not uncommon for a beneficiary to also be appointed as the trustee. However, in such a case, the individual should follow the trust’s instructions. Therefore, whether or not a beneficiary, the trustee should abide by the directions provided in the trust document if it expressly directs that the property be sold. However, as was already mentioned, there can be exceptions.

Discounts and Dishonesty

A trustee’s responsibility is to carry out the trustor’s instructions. Seeking the beneficiaries’ consent is not necessary. Unless they intend to sell trust property below the fair market value, beneficiaries can’t do anything to stop the sale.

Trustees are also fiduciaries. This implies that one needs to act honestly with beneficiaries. Selling property below its fair market value does not always mean working in the beneficiaries’ best interests. Neither is self-dealing, which involves placing one’s interests ahead of those of the beneficiaries. If the beneficiaries suspect discounts and dishonesty, they can move to stop the sale. However, doing so involves a court petition, and one should be prepared to prove their case and shoulder the costs.

Can a trustee sell a property without all of the beneficiaries’ approval?

The trustee cannot sell an irrevocable trust‘s real estate without the beneficiaries’ written approval. Although, in some circumstances, the original trust agreement may contain clauses that permit sales without the beneficiary’s consent. Such provisions, if any, should always be strictly complied with.

If there are numerous beneficiaries, they may need to agree before any modifications to trust assets are made. Doing so helps avoid being sued. But, suppose the trust’s language grants the trustee exclusive control over the way assets are managed. In that case, this power precedes any disputes among beneficiaries over the administration or distribution of the trust assets.

A General Guideline

The lesson here is that a beneficiary typically cannot halt the sale of trust property. A trustee carries out the instructions of a trust that specifies the sale of assets. Therefore, the beneficiary cannot subvert these guidelines.

Always consult a specialist if you wish to sell a property owned by a trust.

A trust lawyer can assist with the following:

● Interpret the trust instructions, so individuals know their duties, responsibilities, and rights;

● Obtain the agreement of each beneficiary or the probate court’s permission if there are any gray areas;

● Create a plan for selling the estate with the help of a competent real estate agent.

Speak with an attorney if you need help with trust management, administration, or litigation. We assist many trustees in resolving their legal trust-related concerns. To find out how we can assist you, contact us right away.

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ADDRESS

Hess-Verdon & Associates, PLC
620 Newport Center Drive Suite 1400
Newport Beach, California, 92660
Office: (949) 706-7300 
Toll Free: (888) 318-4430

Copyright © 2022 Hess-Verdon, PLC. All rights reserved. The information on this website is for general information purposes only. Nothing on this site should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing does not constitute, an attorney-client relationship. The verdicts and settlements listed on this site are intended to be representative of cases handled by Hess-Verdon & Associates, PLC. These listings are not a guarantee or prediction of the outcome of any other claims. The information contained on this website is not tax or legal advice and is not a substitute for such advice. State and federal laws change frequently, and the information in this article may not reflect your own state’s laws or the most recent changes to the law. For current tax or legal advice, please consult with an accountant or an attorney.

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Hess-Verdon & Associates, PLC
620 Newport Center Drive Suite 1400
Newport Beach, California, 92660
Office: (949) 706-7300 
Toll Free: (888) 318-4430

Copyright © 2022 Hess-Verdon, PLC. All rights reserved. The information on this website is for general information purposes only. Nothing on this site should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing does not constitute, an attorney-client relationship. The verdicts and settlements listed on this site are intended to be representative of cases handled by Hess-Verdon & Associates, PLC. These listings are not a guarantee or prediction of the outcome of any other claims. The information contained on this website is not tax or legal advice and is not a substitute for such advice. State and federal laws change frequently, and the information in this article may not reflect your own state’s laws or the most recent changes to the law. For current tax or legal advice, please consult with an accountant or an attorney.

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