Q: Can a trustee sell property of the estate to a beneficiary privately at under market value?
My relative has dementia and the Trustee of their estate is selling properties of the estate at below market value and in private to a beneficiary of the trust. They sold a property of the estate without putting it on the market or telling the other beneficiaries. It was sold under market value. There is also a property that the trustee (along with beneficiary) has stated that they should just "give away to the county". How does this benefit the trust? My relative does not need immediate funds for their care, so why the hurry and under market value sales? Is this legal?
A:
This is absolutely not allowed.
A trustee has the duty to treat all beneficiaries fairly and equally, and to protect the assets of the trust. This sounds like the trustee violated both of these tenets.
If the trustee is not doing his duties, you will probably need to ask a judge to remove and replace him.
The trust may have a Trust Protector who can step in and do this for you. Not all trusts use this, but the Trust Protector is a person assigned to be a back door overseer of the trustee, with the power to replace him/her. Take a look in the trust to see if you have that provision.
A:
The (new) trustee needs to follow the rules about being a trustee. You probably need to get an attorney to protect your future interests. The trust is not likely in payout mode, triggered by some dementia clause. But, you have to read the trust, just to make sure that it doesn't include something creative regarding dementia (highly unlikely).
Once the trust is reviewed, your attorney can draft a letter to the trustee or the trustee's attorney, to get to the bottom of the transactions. Fair market value doesn't mean an asset has to be "listed" on the market, but it does mean that procedures are followed to arrive at fair market value. You can bet that if an attorney is involved, the attorney will want that procedure documented, including getting all the future beneficiaries involved in any "asset shedding" that might be undertaken for tax planning purposes.
Disclaimer: The response given is not intended to create, nor does it create an ongoing duty to respond to questions. The response does not form an attorney-client relationship, nor is it intended to be anything other than the educated opinion of the author. It should not be relied upon as legal advice. The response given is based upon the limited facts provided by the person asking the question. To the extent additional or different facts exist, the response might possibly change.
Justia Ask a Lawyer is a forum for consumers to get answers to basic legal questions. Any information sent through Justia Ask a Lawyer is not secure and is done so on a non-confidential basis only.
The use of this website to ask questions or receive answers does not create an attorney–client relationship between you and Justia, or between you and any attorney who receives your information or responds to your questions, nor is it intended to create such a relationship. Additionally, no responses on this forum constitute legal advice, which must be tailored to the specific circumstances of each case. You should not act upon information provided in Justia Ask a Lawyer without seeking professional counsel from an attorney admitted or authorized to practice in your jurisdiction. Justia assumes no responsibility to any person who relies on information contained on or received through this site and disclaims all liability in respect to such information.
Justia cannot guarantee that the information on this website (including any legal information provided by an attorney through this service) is accurate, complete, or up-to-date. While we intend to make every attempt to keep the information on this site current, the owners of and contributors to this site make no claims, promises or guarantees about the accuracy, completeness or adequacy of the information contained in or linked to from this site.
