The scope of a trustee’s power over the funds and assets a trust holds can make beneficiaries feel at the trustee’s mercy. However, trust laws protect beneficiaries and prevent trustees from abusing their power. While trustees can sell trust property, beneficiaries often wonder, Can a trustee sell trust property to himself or herself? The answer is a resounding No!
At Gokal Law Group, we have spent years helping countless beneficiaries bring trustees who sell trust property for their gain to justice. Read our blog to learn why and when this transgression warrants trust litigation.
Can a Trustee Sell Trust Property to Himself or Herself in California?
Unless the trust instrument makes specific allowances, trustees cannot loan money to themselves or purchase or sell property to themselves from the trust or another trust they manage. This prohibition serves as protection to beneficiaries.
The fiduciary duties of a trustee include being loyal to beneficiaries and avoiding conflicts of interest. Trustees selling trust property to themselves create conditions ripe for a conflict of interest, which is grounds to pursue California trust litigation with the help of an attorney.
Also, a trustee selling property from the trust to themselves could constitute self-dealing, which is when a trustee acts to benefit from the trust property instead of looking out for the beneficiaries’ interests. Self-dealing is considered a severe breach of fiduciary duty.
An example of self-dealing and a conflict of interest is if a trust holds a property valued at $200,000, and the trustee sells it to themselves for below market value (e.g. $150,000). Attorneys handle self-dealing as a severe offense and could help you recover losses and remove and replace the trustee.
Just as importantly, even if a trustee is a beneficiary, the same rules apply. Still, reviewing the trust document with an expert like a California trust litigation lawyer is crucial for those wondering, Can a trustee sell trust property to himself or herself?
Nearly every time, this instrument is where the answer to this question lies, and only a trust attorney has the expertise and experience to interpret the complex language in the instrument within the context of California trust law.
“In the eyes of probate, a trustee selling property from the trust to themselves is the same as other breaches of fiduciary duty, like stealing from the trust, and this is one of the most common reasons for removing a trustee. These are severe offenses we see time and time again, and litigation is the only way to bring trustees who place their interests before yours to justice.”
– Andrew Micaraset, Associate, Gokal Law Group
Has a Trustee Violated Their Duty and Sold Property to Themselves? Schedule a Consultation to Protect Your Inheritance!
So, can a trustee sell trust property to himself or herself? Generally, no. Unless the trust document specifically grants them this power, when a trustee sells trust property to themselves, this constitutes a breach of their fiduciary duty and grounds to pursue trust litigation.
Visit our Contact Page to schedule a consultation to reclaim trust property and protect your inheritance.