Can a trustee sell trust property?
So, you are the Trustee and are now experiencing issues with the beneficiaries? Is there property that needs to be sold but a beneficiary claims to have rights to the property? We can assist you in navigating the ever-changing world that is trust law. Indeed, we have expertise in trust law and experience helping trustees who have issues with beneficiaries and one or more is suing for breach of fiduciary duty.
Can a trustee sell trust property even though there are beneficiaries staking claims to the property?
As a trustee, your first obligation is to the trustor. Suppose the trust states a property will be gifted to a beneficiary. In that case, you must act within your fiduciary duty to complete while considering debts and taxes. Any back taxes need to be paid off before asset distribution. The selling of property is always a sore spot between siblings, yet the trustee has the fiduciary duty to disperse assets even if a property has to be sold.
What is a Trust?
A trust is an agreement between two parties to hold the other’s property’s legal title and manage it for the owner’s advantage and listed beneficiaries.
A trust is a fiduciary relationship involving three parties.
The person who creates the Trust and transfers the legal title of their property is known as the ‘holder.’
- The party in charge of the Trust is called the ‘trustee.’
- Those who profit from the property in a trust are called ‘beneficiaries.’
There are various reasons why people use Trusts. The main ones are for privacy and taking care of their dependents. When you purchase a property using a Trust, you will have privacy because your name won’t appear in the property’s public records. Entrusting a property to someone or a responsible entity keeps it going until beneficiaries come of age and take over.
Can a trustee sell trust property?
The short answer to whether a trustee can sell trust property is yes and no; it all depends on what the trust agreement says.
When you may sell a trustee owned property
Yes, you may sell a property in your Trust if the terms of the Trust allow it. After all, a Trust is a legal agreement. If there’s a clause in it saying you can sell a property, you won’t be prosecuted for doing it.
Issues arise when you don’t get the signed consent of all the beneficiaries. While you have the power to sell a trustee owned property without needing anyone’s permission, it’s always wise to obtain the consent of all the beneficiaries of the Trust to avoid being sued by unsatisfied beneficiaries. If not every one of them agrees, you can seek approval from the Probate court.
If you want to sell a trustee owned property, always speak to a professional.
A trust attorney will help in the following ways:
- Get the consent of all beneficiaries or probate court approval.
- Work with an excellent real estate agent to document how to sell the estate.
When you may not sell a trustee owned property
If the trust document does not allow you to sell the property in your Trust, you shouldn’t sell the property; doing so will be breaching your fiduciary duties, and you may be sued.
Can a trustee sell trust property to himself?
Trustees have a responsibility to be loyal to the beneficiaries of the Trust. A trustee cannot, therefore, sell a property in their Trust to themselves. Doing so will be a conflict of interest because they are both the buyer and the seller and cannot get a maximum fair amount for the property while pursuing their interests (paying a smaller amount than the fair market value).
When a trustee sells a property in their Trust to themselves, they can be accused of self-dealing. Self-dealing is when a trustee acts to benefit from the property in Trust instead of looking for beneficiaries’ interests. Selling a trustee owned property to yourself is right there with other crimes such as stealing from the Trust, modifying terms to suit your best interest, and more.
The trust deed tells it all about what you as a trustee should and should not do. If you have concerns regarding the trust deed of a property in your care, discuss your worries with an attorney. Indeed, we help a lot of trustees sort out the legal issues they have regarding trusts. Call us today to find out how we can help you.
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