Can a Trustee Sell Trust Property Without All Beneficiaries Approving?

Whether you are creating a trust or taking on responsibility as the trustee, you need to know the ins and outs of this important role. A trustee has critical duties to perform and obligations to adhere to. One of these obligations is to protect the property of the person who has created the trust and the interests of the beneficiaries. Trustees may also need to manage trust property and make important decisions in certain situations. 

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One question many people want to know the answer to is: Can a trustee sell trust property without beneficiary approval? This is a complex topic with numerous considerations, so we’ve unpacked everything you need to know.

Can a Trustee Sell Property Without Beneficiary Approval?

For many trusts, a trustee can sell trust property without asking the beneficiaries. However, the answer depends largely on the type of trust and the authority granted to the trustee. The actions a trustee can legally take are outlined in the trust’s document, and in many cases, the trustee is permitted to sell assets without getting prior approval from the beneficiaries if they are exercising their best judgment in the management of trust assets. 

What Powers Does a Trustee Have?

According to Craig Tarpinian, LegalShield provider lawyer with Powers Chapman in Michigan, “A trustee is a fiduciary, meaning a person in a position of trust and loyalty to the beneficiaries. Under this standard, a trustee must act in the best interest of the beneficiaries at all times.” 

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As a fiduciary, a trustee has the authority to conduct certain tasks without asking beneficiaries for their approval. This includes managing and investing trust assets, paying trust expenses, and distributing trust funds following the terms outlined in the trust. A trustee also has the power to sell trust property if doing so aligns with their fiduciary duties and falls within the scope of the authority outlined in the trust. 

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However, the trustee’s obligations extend beyond merely managing assets. They are obligated to always act in the best interest of the beneficiaries and comply with the terms of the trust. This means that even though the trustee doesn’t need permission from the beneficiaries to sell trust property, the sale must still be in the best interest of the beneficiaries and for a price that reflects the fair market value of the assets. 

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Even still, there are some trust documents that require trustees to consult with beneficiaries before making certain decisions. In this case, a trustee cannot sell trust property without beneficiary approval. 

How Are Beneficiary Rights Protected?

While beneficiaries generally cannot prevent trustees from selling trust property, they have several rights that protect their interests. According to Tarpinian, the beneficiaries’ rights and the trustee’s duties are intertwined. Tarpinian explains, “The trustee’s duty is like a coin with two sides: on one side is the trustee’s duty to manage and administer the trust, and on the other side is the beneficiaries’ right to receive the trust benefits as specified in the trust.” 

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Tarpinian continues: “The rights of beneficiaries serve as a counterbalance to the powers of the trustee. While the trustee has broad powers to manage and administer the trust, these powers are not absolute. They are always subject to the trustee's duty to act prudently and in the best interests of the beneficiaries. Furthermore, beneficiaries have the right to be informed about the trust and its administration.” 

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So while a trustee may legally be able to sell trust property without the approval of the beneficiaries, they still have a duty to act prudently and in the best interest of the beneficiaries. If a trustee does not meet these obligations, beneficiaries have the right to take action. 

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Specifically, beneficiaries have the right to receive periodic accountings of all transactions related to the trust, to ask for an explanation of why specific property was sold or transferred, and to challenge the sale of trust property if they believe the trustee has violated their fiduciary duty. 

What Remedies Do Beneficiaries Have?

If a trustee sells property that a beneficiary believes they were not authorized to sell, or sells property at an unfair price, the beneficiary may be able to take certain actions.

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First, they should try to resolve the dispute informally by contacting the trustee directly or through an attorney. If they are unable to resolve the matter, however, they may need to seek legal action, including petitioning the court to remove the trustee, filing a lawsuit against the trustee for breach of fiduciary duty, or asking the court to reverse or undo the sale. 

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These are complex legal proceedings that most people would require legal assistance for. A LegalShield provider attorney can connect you with a qualified legal expert in your area to help you navigate trustee disputes. Below is a breakdown of some remedies beneficiaries have if they believe a trustee has violated their fiduciary duty. 

How Can a LegalShield Attorney Help?

Setting up a trust involves complex legal language and important decisions, such as choosing a trustee and defining the terms of the trust. Whether you are creating a trust or dealing with trustee misconduct, it’s important to have a qualified estate planning attorney on your side. 

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Through a LegalShield membership, you have access to dedicated provider lawyers who can provide guidance on complex legal processes, including estate planning, at an affordable rate. For questions about the real estate side of trust property — title transfers, deed changes, and property sale procedures — LegalShield's real estate legal services cover those areas as well.

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FAQs

What is a trustee?

A trustee is an individual or organization who manages and administers trust property on behalf of the beneficiaries. The trustee is responsible for ensuring that the trust is managed in accordance with the terms outlined in the trust document.

What are the fiduciary duties of a trustee? 

A trustee has a legal obligation to act in the best interest of the beneficiaries. They must manage trust assets prudently, avoid conflicts of interest, keep accurate records, and distribute assets according to the terms of the trust.

Can beneficiaries prevent a trustee from selling property?

Typically, no. Unless the trust document specifically requires trustee’s to consult with beneficiaries before making certain decisions, trustees generally have the authority to sell trust property without prior approval from beneficiaries. However, the sale must be in the best interest of the beneficiaries and at a fair market value.

What can beneficiaries do if they disagree with how the trustee is managing the trust?

Beneficiaries have several options if they disagree with the trustee’s management. They can request an accounting of the trust, consult with an attorney, attempt informal resolution with the trustee, or take legal action if needed. This might involve petitioning the court to remove the trustee, filing a lawsuit for breach of fiduciary duty, or seeking to reverse specific transactions.

How can I protect my rights as a beneficiary?

Staying informed about the trust and its administration is a good starting point. Request regular accountings and question any transactions that seem contrary to the purpose or terms of the trust. If you believe the trustee is not fulfilling their duties, contact an attorney immediately.