Q: Is selling a home $10k below market value on purpose by power of attorney for a trust a breach of fiduciary duty?
The son is a trustee with power of attorney granted by the family revocable living trust sold his mother's house and put her in a senior care facility. The mother has since passed away. Do the other siblings have standing or a right to sue that brother? The house needed some repairs. The son didn't take the highest bid on the house so the buyer would not cause problems due to the repairs it needed. The pool needed plastering and refilling. The HVAC needed repairs. The kitchen floor needed remodeling since it didn't get done during the kitchen remodel. There were new custom cabinets, granite counter tops, new oven, new stove, new dishwasher and new stove vent. House was made in 1960s with AC ducts. Nice 2200 sqr ft home on 1/4 acre lot. 3 bathrooms had been remodeled. Plus more unspecified improvements. The roof would last decades.
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A:
Selling a home significantly below market value can potentially be a breach of fiduciary duty if the trustee fails to act in the best interest of the trust beneficiaries. Under California law, trustees have a duty to manage trust assets prudently and to maximize the value of the estate. In this scenario, the son, as trustee and with power of attorney, sold the house for $10k less than market value to avoid complications with repairs.
The siblings may have standing to sue if they believe the trustee acted imprudently or not in the best interest of the trust. They can argue that the house, despite needing some repairs, was undervalued and that a better price could have been achieved, impacting their inheritance. The trustee’s reasoning for not taking the highest bid could be scrutinized in court to determine if it was justified or if it constituted a breach of fiduciary duty.
To address this situation, the siblings should consult with a legal professional to assess the merits of their case. Gathering evidence, such as market valuations, repair estimates, and the details of the sale, will be crucial. If the court finds that the trustee did not act in the best interests of the beneficiaries, there could be legal consequences, including financial restitution to the trust.
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