When someone is appointed trustee of a trust, they have considerable power over the assets and property it holds. This includes the authority to sell trust property and make transactions using the assets to keep the trust profitable. A trustee may even try to buy trust property for themselves, which often makes beneficiaries wonder, Can a trustee buy property from the trust in California? We are here to answer that question for you.
At Gokal Law Group, we have empowered countless beneficiaries to enforce their rights when trustees violate their fiduciary duty. Here’s what you need to know about trustees buying trust property.
Can a Trustee Buy Property from the Trust in California?
The short answer is yes—in some situations. Even when a trustee can purchase property, they must adhere to the trust document, local laws, and their fiduciary duty. Failure to do so is grounds to pursue trust litigation.
Related Article: California Trust Law: Can a Trustee Be Held Personally Liable?
Fiduciary Duty
First, the purchase of the property must not violate fiduciary duty. Trustees have several obligations to ensure they always act in the best interest of beneficiaries. They must always act with good faith, loyalty, and care. Any purchase must align with this duty. A trustee purchasing property at fair market value is a good sign they have acted in accordance with this duty.
Trustees should also document all trust transactions because another fiduciary duty they must uphold is providing information and accounting to beneficiaries.
If a trustee gets a “deal” on the property, this would be a disadvantage to the beneficiaries and a clear conflict of interest.
“If a trustee didn’t get an independent appraisal of the property before purchasing it, this is a red flag that there might be a conflict of interest. In these situations, working with an attorney is important. They can compel the trustee to provide the records of the transaction, get an independent appraisal to prove that the transaction was a conflict of interest, remove the trustee, and remedy the damage done to the trust and your inheritance.”
– Alison S. Gokal, Partner, Gokal Law Group
Even when a trustee is also a beneficiary, they must adhere to these laws and the trust document when administering the trust.
Related Article: What is a Conflict of Interest Between a Trustee and Beneficiary in California?
Trust Terms and Local Laws
The trust terms and local laws are the next elements that you must consider.
The trust document may contain specific provisions or restrictions about transactions between the trust and trustee, and these must be carefully reviewed and followed. Local laws can also influence whether or not a trustee is allowed to buy property.
Working with a trust litigation lawyer is crucial because they will have extensive knowledge of local probate laws that govern the trust and be able to unpack and interpret the complex legal language in a trust to determine if it allows this transaction.
Related Article: How Do You Prove a Breach of Fiduciary Duty?
Has a Trustee Abused their Power When Buying Property from a Trust? We Can Enforce Your Rights!
So, can a trustee buy property from a trust in California? While a trustee may be legally allowed to buy property from a trust, they must always adhere to specific laws and fulfill their fiduciary duty. It is not uncommon to see a trustee neglect these obligations in the process of purchasing a property from a trust they administer. You deserve to work with an attorney who can enforce your rights.
If you need premier representation, visit our Contact Page and schedule a consultation to protect your inheritance, preserve the integrity of the trust, and defend your family’s legacy from a negligent or malicious trustee.
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