Does a Beneficiary have the first choice in buying a home in a trust?

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Does a Beneficiary have the first choice in buying a home in a trust?

John passed away and left a Trust naming his daughter Mary as the Trustee. In the
trust John also named his son Barry as a beneficiary. The only item in the trust
is Johns home, paid free and clear. Mary now wants to sell the home.

Does she have to offer to sell it to Barry before anyone else?
Can Barry contest the selling price?

Asked on July 1, 2019 under Estate Planning, California

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 2 years ago | Contributor

1) No, a beneficary has no right of first refusal or other first chance to buy a trust asset, unless the terms of the trust (the trust documents) specifically say he does.
2) A trustee has a "fiduciary duty" to the beneficiaries. Among other things, this is a duty to be loyal to their interests and exercise the same degree of care in managing the trust (including selling assets) for them as a reasonable person would for his/her own assets. So if she seems to be selling for an unreasonably low price--not that she's not getting the best price possible, since with real estate, you can't guaranty the "best price"; rather, that is it unreasonably below comps--he could bring a kind of legal action in county court called an action "for an accounting" to make her account for her actions. A judge could force her to raise the price or, if already sold for too low, to possibly pay her own money into the trust to raise the proceeds to a reasonable level.


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