Can a trustee use the trust money to purchase a house?
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Can a trustee use the trust money to purchase a house?
This is a trust of Charles Schwab account from my brother who passed
away left a trust to my Mom, sisters, and myself. His living wife is the
trustee.
Asked on January 24, 2018 under Estate Planning, California
Answers:
S.L,. Member, California Bar / FreeAdvice Contributing Attorney
Answered 6 years ago | Contributor
The trustee cannot use funds from the Trust to purchase a house. This is a breach of the trustee's fiduciary duty.
The beneficiaries should sue the trustee for conversion which is theft in a civil case. The remedy is to seek a constructive trust. A constructive trust will require the trustee to return the stolen funds or items purchased or the value of items purchased with the stolen funds to the Trust. A constructive trust can trace the stolen funds to items that were acquired with those funds.
If the Trust provisions provide for the removal of the trustee and appointment of a successor, those procedures should be followed.
If the Trust is silent on the removal of the trustee and appointment of a successor, the beneficiaries can petition the court for removal of the trustee and appointment of a successor.
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