Can a Trustee Sell Trust Property Without Beneficiaries’ Approval?
Under California Probate Law, a trustee generally has the authority to sell trust assets without obtaining approval from all beneficiaries. More importantly, it is recommended that trustees seek consensus and secure written agreements. This will help alleviate disputes or legal challenges. Maintaining open communication and documenting transactions ensures transparency and trust among all parties involved. If the trust document stipulates that the trustee must consult beneficiaries before selling property, they must comply. Suppose the trustee sells a house given explicitly to a named beneficiary. The beneficiary has a right to receive the title.
A trustee can usually sell trust property without all beneficiaries’ approval. However, it is still wise for them to communicate plans to sell and seek consensus. This is to avoid disputes or legal challenges. If the trust document stipulates that the trustee must consult beneficiaries before selling property, they must comply. Suppose a beneficiary is set to receive a specific gift, such as a house. The trustee cannot sell that house, and the beneficiary has a right to receive the title.
What are the steps a trustee should take before selling trust property?
Before selling trust property, a trustee should take the following steps:
- Review the trust documents: The trustee should review the documents to ensure they have the right to sell the property. That is usually standard and should be part of the trust paperwork. Most courts allow the trustee to sell the property unless the trust documents expressly forbid it.
- Contact the beneficiaries: A trustee is still recommended to communicate any plans to sell and seek consensus to avoid disputes or legal challenges. The trustee usually does not need beneficiary approval to sell the trust property.
- Find an experienced trust attorney: The trustee should find an experienced trust attorney to facilitate the process.
- Determine whether the trustee needs to approve the sale: In some cases, the trustee may need to give their approval for the sale.
- Complete the sale: Once the purchase and sale agreement has been signed, the trustee must sign the deed to the buyer. The buyer will then need to pay the agreed-upon sales price. Once the sale is complete, the trustee must provide the beneficiaries with a written sale account.
- Considerations in a revocable trust: If the trust is revocable, the grantor can make trust modifications at any time to the trust agreement. If the grantor decides to make changes, they must contact the trustee and provide them with written notice.
- Appraise the property: Regardless of whether the trustee plans to hold or sell the trust real property or distribute it to the trust beneficiaries, an appraisal of the real property must be done. This gives the value of the real property at the date of the death of the settlor(s).
- Consult with legal counsel: It is a good idea for the successor trustee to consult with legal counsel who practices in California in Estate Planning, Trust Administration, or Probate regarding the required steps for not only the preliminary change of ownership forms but also the exclusions or exceptions from property tax reassessment.
In summary, before selling trust property, make sure to do the following: review the trust documents, contact the beneficiaries, find an experienced trust real estate agent, determine whether the trustee needs to approve the sale, complete the sale, appraise the property, and consult legal counsel.
What can a trustee not do in California?
In California, a trustee holds and manages property to benefit the trust’s beneficiaries. However, there are certain things that a trustee cannot do in California. Here are some of the things that a trustee cannot do in California:
- Use trust property for personal gain: A trustee has a duty not to use or deal with trust property for their profit or any other purpose unconnected with the trust. Nor to participate in any transaction in which the trustee has an interest adverse to the beneficiary.
- Enforce any claim against trust property that the trustee purchased after or in contemplation of appointment as trustee: A trustee may not enforce any claim against trust property that they bought after or in review of appointment as trustee. However, the court may reimburse the trustee from the trust property—the total amount the trustee paid in good faith for the claim.
- Require a beneficiary to relieve the trustee of liability as a condition for making a distribution or payment to, or for the benefit of, the beneficiary: A trustee may not require a beneficiary to relieve the trustee of liability. A condition for distributing or paying to or for the beneficiary’s benefit. That is, if the trust instrument requires the distribution or payment.
- Delegate their responsibilities or authority to anyone: While trustees can hire financial advisors, attorneys, bookkeepers, CPAs, realtors, etc., these professionals are hired to assist them with their duties. The trustee may not delegate their responsibilities or authority to any other person.
- Favor one beneficiary over another: A trustee cannot favor one beneficiary. The trustee must also act impartially in investing and managing trust property. While simultaneously considering the differing interests of the beneficiaries.
- Use their power to gain an advantage at the expense of beneficiaries: Trustees are prohibited from using it to gain an advantage.
- Fail to perform their duties and obligations: If a trustee fails to perform their duties and responsibilities, the court can deem them personally liable.
It is important to note that beneficiaries have a wide range of potential legal relief. Suppose you think your trustee breached their fiduciary duties. Among those remedies are forcing the trustee to carry out their duties. That can mean preventing the trustee from committing a breach. Or recovering monetary and other damages, suspending the trustee, and denying or reducing the trustee’s compensation.
More on your Trustee breaching their fiduciary duties
If you would still like more information on Trust Litigation. Or, removing a Trustee, check out our complete Overview of California Trust Litigation, available on our website. And if you have more questions about your rights as a Beneficiary and what you should know moving forward.
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