Yes, but the money must stay in the trust. This happens quite often with Bypass Trusts and Marital Trusts. A surviving spouse is named as the Trustee, but the Trusts themselves are irrevocable. They cannot be amended or changed, but they can be administered by the Trustee.
Nearly every Trustee has the right to sell Trust assets—it comes with the job. But that doesn’t mean the Trustee can pocket the sales proceeds personally. Once an asset is sold, the sales proceeds must stay in the Trust. For example, if a house is sold, then the sales proceeds must be deposited into a bank account in the name of the Trust. Or the proceeds can be deposited into a brokerage account and invested prudently.
There are some exceptions to the power to sell. If the Trust document states that an asset cannot be sold, then the Trustee cannot do so. Unless, that is, if a reason arises that would require sale. A provision in a Trust document stating a Trust asset cannot be sold is never absolute. There are times when a sale is required for any number of reasons.
For example, the Trust may own a single house. But the house may need substantial repairs and there are no other assets that can be used to fix up the place. In that case, the house would have to be sold to access the equity, and thereby protect the Trust from being destroyed.
The same would be true if the Trust does not have enough cash to pay its debts. If a big debt is owed, and there’s not enough cash to pay it, then an assets—such as a house or a business—may have to be sold to pay the debt.
The final exception to the power to sell is when a house is supposed to go to a named beneficiary. In that case, the house must be transferred to the specific beneficiary unless its sale is required to pay debts of the decedent. Absent that, the house cannot be sold. That is true of any specifically given asset, not just a house.
If your Trust does not fall into one of these exceptions, then the surviving spouse acting as Trustee probably has the right to sell any property he or she likes.
For advice on your specific situation, we recommend speaking with an experienced attorney. When you contact Albertson & Davidson, you will receive a free case evaluation (via teleconference during the pandemic). Fill out our online form or call us today!