Trustees are typically forbidden from selling and buying trust property for their own personal use
Trustees don’t generally need a beneficiary's approval before selling trust assets
The trustee has the right to sell trust property in accordance with the trust agreement created by the grantor (the person who opens the trust, also known as the trustor or settlor). When you set up a trust, you can outline instructions as to what the trustee can do with the trust property, which might include money, stocks, bonds, real estate, and other high value assets. The trustee, which is a fiduciary duty of the trust, typically doesn’t need permission from beneficiaries to sell trust property, but obtaining approval or giving beneficiaries an informal accounting can help the process run more smoothly. Assets transferred into a trust can pass on to your beneficiaries outside of the probate process, which makes using a trust an advantageous part of an estate plan.
It's the trustee's fiduciary duty to fulfill the terms set by the grantor, which may include distributing, investing, or trust property. The trustee can sell trust property when specified in the trust document whether or not the trust is a living trust or a revocable trust.
If you open a revocable living trust, you will likely serve as trustee so that you have the flexibility to sell trust assets at your discretion. After your death, a successor trustee will manage the assets and distribute them to your heirs according to your wishes. If there is real estate, the trustee may need to sell it to divide the proceeds among the beneficiaries.
Learn more about how trust assets are distributed to beneficiaries.
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Irrevocable trusts, which can’t be amended in most cases, are usually created to serve a special purpose (like reducing estate tax) and may exist for many years after the grantor's death. You can’t change or dissolve the trust, so it's important to properly construct a trust agreement that contains all the proper instructions on how and when the trustee should sell or invest trust property. You can speak with an estate planning attorney to create an irrevocable trust.
A revocable trust is right for most people, and you can open one with Policygenius for just $280.
The trustee doesn't need final sign off from beneficiaries to sell trust property. However, the trustee may want to get a written release from the beneficiaries anyway to prevent arguments down the line, since a beneficiary has the right to petition the court to remove the trustee. For example, if the trustee sells real estate property owned by the trust, a beneficiary may argue that it was sold for less than the fair market value.
Sometimes the trustee may also be a beneficiary. For example, you may be the trustee and beneficiary of a family trust created by your father (the settlor). If your siblings are also trust beneficiaries, then you may want to consider getting sign off from them before selling trust property to prevent any potential squabbling.
Related article: Can a trustee remove a beneficiary from a trust?
Trustees aren't allowed to sell trust property to themselves unless the trust agreement has explicitly allowed them to do so. They also shouldn’t sell the trust property to another trust that they manage, or borrow trust funds for personal use.
See also: Can a trustee withdraw money from a trust?
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Elissa Suh is a personal finance editor at Policygenius in New York City. She has researched and written extensively about finance and insurance since 2019, with an emphasis in esate planning and mortgages. Her writing has been cited by MarketWatch, CNBC, and Betterment.
Elissa has a B.A. in Film Studies from Barnard College.
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