A trustee must perform a balancing act when administering the trust. Their obligations include managing trust assets, acting in the best interests of the beneficiaries and trust, and fulfilling their fiduciary duties. Because of this, many beneficiaries wonder, Can a trustee live in a trust property in California? It depends on a number of factors. But luckily, we are here to break this situation down for you.
At Gokal Law Group, we have helped countless beneficiaries enforce their probate rights and successfully recovered millions of dollars in settlements and trial verdicts for clients. Here’s when a trustee can and can’t live in a trust property.
Can a Trustee Live in a Trust Property in California?
First, let’s explore situations where the trustee is also the trust creator.
If the trustee is the person who created the trust, they can live in a trust property with no problems. Also, if the trust was explicitly designed to support the trustee and have them live in the property, they can usually live in it.
But if the trustee is supposed to administer and manage the trust and its assets in the best interest of beneficiaries, the trustee cannot live in the trust property unless they are, in most cases, paying the fair market value of rent to the trust because to do otherwise would constitute a conflict of interest.
Even if a trustee is willing to pay rent at fair market value, we still recommend hiring an attorney to determine if they are paying fair market value. If they aren’t, even unintentionally, this is considered breaching fiduciary duty.
If a trustee is a beneficiary, they cannot live rent-free in a trust property either because the trustee must make trust property productive or profitable, and leaving in the trust property rent-free could constitute a conflict of interest. .
“Ultimately, whether or not a trustee can live in a trust depends on their relationship to the trust and whether or not they’re paying rent. If they didn’t create the trust, they may not be allowed to live in the trust property rent-free.”
– Alison S. Gokal, Partner, Gokal Law Group
Related Article: Trustee Duties in California: Avoiding Conflicts of Interest
Is a Trustee Violating Their Duty and Living in a Trust Property? We Can Enforce Your Rights!
So, can a trustee live in a trust property in California? It depends on several factors. The trustee’s relationship to the trust, whether they are willing to pay rent, and whether or not the rent is fair market value all come into play when answering these questions. Your best bet is to work with a trust attorney who can unpack the language of the trust, determine the role that the trustee’s relationship to the trust will play, leverage their resources and connections to appraise the property, and determine what the fair market value is.
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