Can A Trustee Sell Trust Property Without All Beneficiaries Approving

So your relative just passed away and left you as the trustee of their trust. Now you’re suddenly responsible for managing all sorts of assets for the benefit of various family members. As you dig into the trust documents, you realize your powers include selling assets like real estate if needed. But can you really sell trust property without getting approval from all the beneficiaries?

This is a complex issue that trips up many trustees. While you may technically have the legal power to sell assets, doing so without consent could prompt lawsuits from disgruntled relatives. Even if you prevail in court, the costs and headaches just aren’t worth it.

The better approach is getting consent upfront, even if the law doesn’t require it. Let’s dive deeper into trustees’ powers, the risks of selling assets without permission, and how to avoid issues.

What are a Trustee’s Powers and Duties?

Before tackling whether you can sell assets without consent, you need to understand a trustee’s role. The settlor who creates the trust transfers legal ownership of assets to the trustee. This gives the trustee authority to manage the property on behalf of the beneficiaries, who maintain an equitable interest.

With this legal authority comes fiduciary duties that trustees must fulfill:

Duty of loyalty – Always act in good faith for beneficiaries’ benefit rather than serving your personal interests

Duty of prudent investing – Manage assets prudently by minimizing costs and maximizing returns

Duty of impartiality – Treat all beneficiaries equitably according to their interests

Absent specific limits in the trust terms, you generally have broad powers over assets. This normally includes selling or encumbering real estate, securities, businesses etc. But just because you can sell doesn’t always mean you should.

Risks of Selling Assets Without Consent

Given your powers as trustee, you usually won’t face legal issues for properly selling assets without explicit beneficiary consent. But disgruntled relatives can still sue you for breach of fiduciary duty if you fail to meet your obligations. For instance, if you:

  • Unnecessarily sell a beloved family property at fire sale prices
  • Engage in self-dealing by selling assets to your own business at below-market rates
  • Intentionally structure sales to minimize certain beneficiaries’ interests

Even defending yourself against lawsuits like these has massive financial and reputational costs. Plus you’ll still need to convince a judge that your actions aligned with fiduciary duties – not an easy task.

Consider a real-life example of beneficiaries suing a corporate trustee for selling their parent’s home in Napa Valley. The trustee argued it needed to diversify assets and the sale price was reasonable. But beneficiaries provided evidence of higher value estimates that they were never informed of.

Ultimately the court removed the trustee and awarded significant damages to plaintiffs for violating its duty of impartiality. The entire ugly episode caused tremendous strife within the family.

Getting Beneficiary Consent

Given nightmares like the Napa estate case, it’s almost always wise to get advance consent from beneficiaries before selling major trust assets. This helps avoid accusations of breach of fiduciary duty down the road.

Of course, achieving unanimous approval is often easier said than done with family trusts. You may need to carefully explain asset management strategies to beneficiaries with varying financial literacy. Some may resist change or feel entitled to utilize properties themselves.

Patience and transparency are vital – within reason. The trustee must act in interests of the trust overall, not just the squeakiest wheel. If one beneficiary drags their feet about selling an underperforming asset, take reasonable efforts to address concerns but don’t let them derail prudent management.

As last resort, California probate code sections 17200-17201 allow you to request the court to instruct beneficiaries to consent to a sale if they resist without good cause. But litigation disclaimer: navigating these court processes can be extremely complex, so seek qualified legal help.

Steps to Support Asset Sale

If you’ve determined selling trust assets is necessary and ideally gotten beneficiary consent, further steps can help shield you from accusations of breach of fiduciary duty:

  • Document detailed business case – Outline quantitative and qualitative factors driving sale decision and how it serves beneficiaries’ interests
  • Obtain professional valuations – Hire appraisers, analysts etc. to substantiate market value and show the process wasn’t arbitrary
  • Interview multiple agents – Vet several realtors thoroughly and be transparent about selection criteria
  • Pre-qualify buyers – Require financial proof and avoid accusations of sweetheart deals

Undertaking due diligence demonstrates you are upholding your duty of prudent investing. It also supplies evidence to defend against lawsuits later alleging the sales process was unfair or rigged.

In one instance, a trustee who sold farmland to a nephew for $3 million below appraisal value defended herself by showing she interviewed over a dozen brokers and the nephew made highest cash offer with no contingencies.

Can a Trustee’s Actions Lead to a Lawsuit Over Trust Property Sales Without Beneficiary Approval?

When it comes to selling trust property without beneficiary approval, a trustee needs to be careful. Failing to obtain the required consent could result in a beneficiary suing an estate time limit. It’s crucial for trustees to adhere to the legal requirements and act in the best interest of the beneficiaries.

What Recourse Do Beneficiaries Have?

If beneficiaries believe you breached your fiduciary obligations when selling trust assets, what actions can they take? Common options include:

  • Sue for breach of duty – Beneficiaries can file civil lawsuits accusing you of violating loyalty, prudence, or impartiality duties when selling assets. The burden would be on you to convince the court through documentation that your decisions were both necessary and fair.
  • Petition for trustee removal – Beneficiaries can argue your handling of asset sales justified removing you entirely as trustee due to negligence or dishonest behavior. Most trusts allow a majority of eligible beneficiaries to vote for removal.
  • Demand accounting and damages – Even after sales are complete, beneficiaries may sue within limitation periods if they uncover evidence you intentionally minimized their interests. They may seek actual damages plus triple damages if the court agrees mismanagement occurred.

Getting hit with lawsuits or removal proceedings throws your world into chaos, not to mention jeopardizing your reputation. The far better path is avoiding problems altogether by securing beneficiary consent beforehand.


At first glance, a trustee’s extensive legal powers make selling assets without input look perfectly acceptable. But undertaking major transactions absent consent, even if legally permitted, risks triggering massive headaches for you as trustee later on.

Rather than invite beneficiary allegations of breach of fiduciary duty, it is prudent to secure unanimous or near-unanimous approval upfront. If cohesion proves impossible, then seek guidance from the courts before acting unilaterally.

With great power over other people’s money comes even greater responsibility. Staying on the right side of that equation means putting extra care toward transparency. This helps maintain family harmony and prevents you from losing sleep at night.