When a loved one passes away, it is a troubling time for all parties involved, and the decisions that need to be made in the time following the death only add to their anxiety. If an individual has placed their assets and property in a trust, it helps to ease the process of distribution and make it less of a burden on their beneficiaries.
When a person passes away with a trust in place, there is an individual they have named, called a “trustee,” who has the responsibility of handling all matters related to the trust as well as distributing the deceased individual’s assets according to their wishes. The trustee is a personal representative tasked with overseeing the trust. It is common for the beneficiaries to be concerned about how the estate is handled and the various decisions the trustee will make during this difficult time.
One of the most common questions that arises is whether the trustee can sell the deceased individual’s property if all the beneficiaries do not agree to the sale. To answer this question, it is important to first understand what the trustee is tasked to do.
Understanding the Role of the Trustee
A trustee has the responsibility of being the steward of a deceased individual’s assets that they placed in a trust. The person who created the trust is called the “grantor,” and in most cases, they appointed the trustee at the time they made the arrangement. The trustee takes on the job of overseeing the estate or trust after the death of the grantor.
This individual is usually a person who is not a beneficiary and has no interest in the trust, as this may easily be considered a conflicting scenario. The trustee acts on behalf of the grantor to handle any and all responsibilities regarding the individual’s estate. They typically receive compensation for the service they provide from the trust’s assets.
What Is the Duty of Loyalty?
A trustee’s “duty of loyalty” to the trust is crucial to the role they play. This means that they must follow the guidelines and rules the trust has specified. This is an essential requirement of being a trustee, as they must adhere to the trust. They must not do anything contrary, regardless of how the beneficiaries feel.
As the trustee performs their duties, they have a fiduciary duty to the beneficiaries and must account for all transactions and actions of the trust. Their role includes the following.
- A duty to act in the beneficiaries’ best interests
- A duty to be impartial between the various beneficiaries
- A duty to carry out their responsibilities in good faith
- A duty to preserve the trust property
As the legal representative for the trust, the trustee’s responsibilities are varied. They must manage the trust’s finances and handle them in an appropriate way. This may include:
- Handling all financial issues
- Investing assets
- Keeping track of assets
- Preparing taxes
- Providing information to all beneficiaries, as necessary
The grantor may select an entity such as a company, an attorney, a family member, or a close friend to act as their trustee.
Do the Beneficiaries Need to Approve the Sale of Property?
If the trustee must sell any property, such as the deceased individual’s house, as part of their duties, they typically do not need to seek the beneficiaries’ approval to do so. Their job is to manage the trust’s assets in good faith, which may include real property, automobiles, stock portfolios, bank accounts, and any other assets held in the trust. Some trusts have a provision stating the trustee must consult the beneficiaries before selling certain property, but a majority do not.
Communication Is Essential
Although a trustee doesn’t need the approval of the beneficiaries to sell property in most cases, it is still wise for them to communicate any plans to sell through means that can be proven in court if necessary, such as an email. If the beneficiaries are willing to agree in writing with their decision, that is also a prudent step to take.
When a trustee decides to sell a property such as a business or a home, it is always a good idea to advise the beneficiaries of the selling price and ask them to confirm in writing that they are comfortable with the sale. This helps to avoid a situation in which a beneficiary may try to sue the trustee in the future for “selling under market value.” Any steps the trustee can take to avoid the risk of being sued help to protect them from any future disputes.
An Attorney Can Help in Unique Circumstances
If a trustee intends to complete a transaction that they are personally involved in, such as one between the trustee and the estate or one in which the trustee will benefit, an estate attorney can secure a release from the beneficiaries to protect the trustee. For instance, if the trustee is transferring a share of the trust’s home, other real property, or business to themselves, they should get it approved through a written release, so there is no danger of being sued.
When a trustee transfers assets to themselves, it may trigger a sense of inequity in the beneficiaries, so explaining that they will be getting a fair share of the trust is vital. This communication may also explain that they will actually get more money through this process than they would if the trustee did not buy them out, as it saves on transaction fees such as those that would be paid to a broker. The beneficiaries must understand that the trustee is fulfilling their legal responsibilities.
When the beneficiaries sign a release stating that they are satisfied with the trustee’s decisions and what they are getting, it should include a summary of the property in the trust, the expenses, and the share that each beneficiary will receive.
Rely on the Trust and Estate Attorneys with a Strong Reputation
Any individual who is tasked with the responsibility of being a trustee, as well as those who wish to set up a trust to ensure the proper administration of their estate, should seek the counsel of a trusted legal team with their concerns. The professionals at Huber Fox have built a reputation on honesty and integrity that makes us stand out from the others. Reach out today to see how we can help you.