When Can a Trustee Refuse to Sell a Howe Owned by Your Trust?

Trustee's often have funny ideas about their power to keep real estate. What do you do when you just want to get cashed out? We discuss a few options in this video.

The following is a verbatim video transcript:

Hi! This is Keith Davidson at Albertson & Davidson. I want to talk to you about a very common problem that we come across all the time. So let’s say you have a trust where the parents are now deceased. You have four siblings, four children that are supposed to share in this estate. They each have an equal share and there’s a house. So, let’s say there’s one house or one piece of real property. And the trustee, who’s one of your siblings, doesn’t want to sell it. They want to keep the house. They want to rent it. They want to act as if they are going to continue to own it and control it indefinitely.

And if your trust says that the distributions are supposed to be made to the children outright, the trustee cannot make the decision to just keep a house. That’s not how this works. Outright distribution means that each of the beneficiaries must receive their share of the trust within a reasonable time. A reasonable time can vary, depending on the estate, but it typically is anywhere between 4 to 12 month would be a reasonable time for you to receive your distribution.

So if you want the house sold and the trustee says, “No, I’m just going to keep it. I’m going to rent it.” Or the trustee says “I’m going to keep it and live in it.” And you all, you know, too bad to the rest of you. That’s a no go. The trustee cannot do that. Of course, they do it any way and that’s where you have to go to Probate Code to stand up for your rights. And so what you would do is you’d file a petition in Probate Court and you’d ask for a couple of things. One is that you’d ask that the court order the trustee to list the property for sale. Secondly, you would ask, probably for trustee removal. But you definitely want the house sold and you want the sales proceeds distributed out to you, hopefully directly from escrow.

Now if there’s some other beneficiaries who don’t want to sell the house. Let’s say there’s two siblings that want to keep the house and two that don’t want to keep the house. Well, the two that want to keep the house can buy out the other two. That’s certainly a possibility. But, of course, everybody’s going to have to come to an agreement about well, what is the value of the house and what is the buyout percentages going to be. If you can agree on those amounts, hey fine, then they can buy out the people who don’t want to own the home.

If you can’t agree to a buyout amount, then the home’s going to have to be sold. And, ultimately, that’s a good result for everybody because once it’s sold, everybody gets their piece of the sales proceeds and they can go off and do whatever they want in their own lives and you’re not locked together any more.

So, all too often, bad trustees will think that because they’re trustee, they can just continue to do things the way they want to do them. They can continue owning things, they can rent it, they can live in the house, whatever. That’s not the way this works and the only way, unfortunately, to really get what you deserve, in most of these cases, is to file in Probate Code and ask the

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