You may be surprised that a trustee can sell a home that is titled in the name of the trust without your consent. The trustee is the legal owner of the trust assets, they manage the trust assets, control them, and call all the shots. A trust beneficiary is the beneficial owner of the trust assets, they receive all the benefits from the trust (or at least they are supposed to receive those benefits).
Trusts create a division ownership – legal owner vs. beneficial owner. That is unique. For example, if you buy a house in your own name, you are both the legal and beneficial owner of that property. You can sell it or refinance it, but you also can live there or rent it out and collect the rent. You have the legal control, but you also receive the benefits from that property.
Background on trustee’s rights
In the trust world, legal and beneficial owners are divided among different people (although sometimes the trustee is also a beneficiary–but even then, they are wearing two different hats). The trustee, as the legal owner, can buy and sell a house without obtaining the permission and consent of the trust beneficiaries. BUT, and this is a significant but, the trustee must always operate according to their fiduciary duties. That means they CANNOT sell real property for less than fair-market value unless there is a valid reason for doing so (such as the house needing substantial repairs). They also cannot enter into sweetheart deals with themselves or their friends, and they cannot pocket the sales proceeds from selling the house. They have the power to sell, but they also have a host of fiduciary duties that set the ground rules for how those powers should be exercised.
Of course, a good trustee would never act in secret. When you have a good trustee, he or she will seek input from the trust beneficiaries before taking any major actions because surprises lead to upset feelings and misunderstandings. Remember, one of the important trustee duties is to keep the beneficiaries reasonably informed of all trust administration issues that affect their share of the trust. When trustee’s act in secret it creates mistrust that can quickly sink a trustee-beneficiary relationship.
So, can trustee sell a home without consent?
Many beneficiaries are surprised to learn that a trustee can sell a house without the beneficiaries’ consent. This makes sense because from the view of the beneficiary, the house belongs to them. They are the ones who benefit from the trust after all. However, trusts separate out beneficial ownership from legal ownership. Thus, benefitting from the trust is different from controlling the trust assets. You are a spectator of the trust assets and the trustee is the one playing on the field.
Having said that, beneficiaries are not powerless over the trust assets. The trustee has many fiduciary duties that they must live up to if they do not want to be sued for breach of trust. The beneficiaries also have the right to seek the court’s help to either stop an action from taking place if they believe it will harm the trust or require the trustee to take an action for the same purpose. The beneficiaries have many rights, but only they can enforce those rights. How does a beneficiary enforce their rights? You hire a good trust litigation law firm to file in court for you.
Don’t be an abused beneficiary
Our attorneys have taken action against hundreds of trustees for abusing their beneficiaries. We’ve also recovered more than $300 million and helped hundreds and hundreds of clients regain their dignity as a trust or will beneficiary through litigation – if you believe you’ve been the victim of inheritance abuse, tell us your story to see if your case qualifies for a free consultation. We’re here to stand, fight and win for you.
Call (877) 408-3813 or reach out online to consult a trust contest lawyer.
