If you are the beneficiary of a trust holding property the trustee refuses to sell, it can feel like you are powerless. It may seem like trustees have unlimited power over the assets within a trust, but they are governed by the trust document, trust law, and their fiduciary duty. If you are in this situation, it is common to wonder: Can a beneficiary force a trustee to sell property? The answer is usually yes depending on the trust document.
At Gokal Law Group, we have spent years helping beneficiaries enforce their rights when a trustee’s inaction becomes a detriment to the trust and their inheritance. Read a case study to learn your options if a trustee refuses to sell property.
Can a Beneficiary Force a Trustee to Sell Property?
Countless situations can arise that could make you want to force the sale of property, prompting many people to ask: Can a beneficiary force a trustee to sell property? To illustrate what your options might be, let’s examine a case study.
Three siblings—Sarah, Jason, and Carmela—were named beneficiaries of a trust created by their mother 26 years prior after she passed away. Their mother owned a condo, which she transferred to the trust when she created it, and a bank account that was titled in the name of the trust with thousands of dollars.
All three siblings were beneficiaries entitled to equal shares of the trust estate (i.e., the condo and bank account). The trust document appointed Sarah, the eldest sibling, as the successor trustee. Sarah refused to sell the condo, still debating between keeping the condo and buying out the other siblings’ other shares.
While Sarah refused to sell the condo, the maintenance fees, insurance, utilities, property taxes, and more for the condo were being paid out of the trust funds. This meant the total amount of the estate to be split between the siblings was being depleted by Sarah’s inaction. The two siblings came to us to see if they could force the trustee, their sister, to sell the trust property.
Let’s get into the options that were available to them and how their complex family dynamics factored in.
Related Article: Taking Siblings to Court: Can Siblings Force the Sale of Inherited Property?
How Can a Beneficiary Force a Trustee to Sell Property?
Interpreting the language in a trust document requires considerable legal expertise and knowledge of California trust law that only a trust litigation attorney possesses. We explained to Jason and Carmela that as trustee, Sarah must adhere to the trust document and uphold her fiduciary duties.
Our first step was to review the trust instrument itself when answering: How can a beneficiary force a trustee to sell property? We had to determine if there was language in the document that gave Sarah the authority to postpone selling the property.
After reviewing the document, we discovered no language that would give Sarah the ability to hold off on the sale. For beneficiaries, it’s important to understand that trustees rarely have the right to refuse to distribute assets and do nothing indefinitely.
Sarah was not open to mediation or any other type of alternative dispute resolution. We explained to Jason and Carmela that they had, two options in this situation:
- They could work with an attorney to file a suit for a partition action, forcing a sale.
- They could pursue trust litigation against Sarah for breaching her fiduciary duty by putting her interests before the beneficiaries (Jason and Carmela) and the trust. She did this by allowing the condo expenses to eat away at trust assets and their inheritance. This would result in removing Sarah from her station as trustee, having her repay the trust for damages caused, and force the sale.
Jason and Carmela were understandably conflicted. Their whole family was still reeling from the loss of their mother, and they did not want to have to take action that would ruin their relationship with Sarah, who was also grieving.
To attempt to preserve the family relationships, Jason and Carmela decided to file a partition action, which is a type of lawsuit available when there are co-owners of a property, and one does not want to sell. This suit forces the sale of property and distributes proceeds equitably and fairly among co-owners, which worked for everyone involved.
“When Jason and Carmela came to us with this case, they made it clear that they didn’t want to damage their relationship with their sister. They just wanted to prevent her from doing further damage to the trust. We explained that a partition action would force Sarah to decide once and for all if she wanted to buy them out because this action provides one last chance to do so, and they decided it was the perfect option. However, if a trustee doesn’t have this relationship with the beneficiaries, pursuing trust litigation for breaching fiduciary duty is imperative to recover damages and protect your inheritance.”
– Nicholas D. Porrazzo, Partner, Gokal Law Group
Related Article: What to Consider When There Are Siblings Contesting a Trust in California
Is a Trustee Refusing to Sell Trust Property? Contact Us to Enforce Your Rights!
So, can a beneficiary force a trustee to sell property? Unless the trust gives a trustee the right to hold off on a sale at the expense of the trust, then you likely can force the sale of property. For situations that require an amicable resolution, a partition action could be ideal. But if the trustee is actively putting their interests before the trust and beneficiaries and you have no need to maintain a relationship with them, working with an attorney to enforce your rights, remove the trustee from their station, recover damages, and force the sale of property may be the best option.
At Gokal Law Group, we always take the time to understand your unique situation and find the best legal avenue for you. Visit our Contact Page to schedule a free consultation to safeguard your inheritance and preserve the integrity of the trust.
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