Can I be held personally liable for selling assets in a trust
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Can I be held personally liable for selling assets in a trust
My grandma has a condo, it is included in a trust, by brother wants to
sell it right away, but their is a claim against her estate. We are
co-trustees. Can I be personally liable?
Asked on June 9, 2018 under Estate Planning, Ohio
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 5 years ago | Contributor
If trustees knowingly act in a way that 1) violates the terms of the trust, 2) violate their "fiduciary" duty to the trust's beneficiaries (i.e. is not loyal to the beneficiaries, puts the trustees ahead of the trustees, or is recklessly careless with trust assets), OR 3) defrauds creditors by trying to hide assets from creditors or deprives creditors of their lawful recourse to or rights against assets, then the trustees can be personally liable. Trustees are protected from good faith acts that simply turn out wrong (e.g. if they do a transaction that makes sense for the trust at the time, but which then loses money), but they are not protected from their knowing wrongful acts. So you cannot act to cheat creditors by selling a home you know they have claim against unless you sell it for the fair market value and then have the money from the sale available to/for the creditors--since in that case, you are simply replacing one assset (condo) with of equal value (equivalent amount of money). But a sale that is designed to deprive the creditors of recourse (e.g. a less-than-fair market value sale to a family member, friends, business you control, etc.) could result in personal liabilty.
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 5 years ago | Contributor
If trustees knowingly act in a way that 1) violates the terms of the trust, 2) violate their "fiduciary" duty to the trust's beneficiaries (i.e. is not loyal to the beneficiaries, puts the trustees ahead of the trustees, or is recklessly careless with trust assets), OR 3) defrauds creditors by trying to hide assets from creditors or deprives creditors of their lawful recourse to or rights against assets, then the trustees can be personally liable. Trustees are protected from good faith acts that simply turn out wrong (e.g. if they do a transaction that makes sense for the trust at the time, but which then loses money), but they are not protected from their knowing wrongful acts. So you cannot act to cheat creditors by selling a home you know they have claim against unless you sell it for the fair market value and then have the money from the sale available to/for the creditors--since in that case, you are simply replacing one assset (condo) with of equal value (equivalent amount of money). But a sale that is designed to deprive the creditors of recourse (e.g. a less-than-fair market value sale to a family member, friends, business you control, etc.) could result in personal liabilty.
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