Whether dealing with a trust or administering a will after a loved one has passed away, there are times when an executor or trustee may be inclined to liquidate assets and distribute cash to beneficiaries rather than transfer real property, stocks or other investment holdings. It is in the discretion of the trustee or executor to make this decision as long as they are able to get close to fair market value for the assets. The exception to this would be that there are specific restrictions imposed by the language in the will or the trust document.
It often makes sense to liquidate these types of holdings and distribute cash, especially in respect to real estate. Owning real estate jointly as a group of beneficiaries would require all of the beneficiaries to manage it together and that could become overly complicated. Liquidating assets during the administering of a will is often thought to be the simpler approach.
While the executor or trustee can sell property without getting all of the beneficiaries to approve; it is wise to consult with all heirs/beneficiaries and make decisions consistent with their wishes if possible.
To take it a step further, it is best practice, although not required, for the trustee/executor to advise all beneficiaries of the price for which the asset is being sold and confirm in writing that the beneficiaries are comfortable with that price. This avoids a future lawsuit alleging the trustee or executor “sold it under market value.” So does the trustee have the final say? Yes. But should the trustee sell the property without all beneficiaries approving? Not really because of the additional risk.
Getting a release from beneficiaries is especially crucial when the transaction in question involves the trustee personally. This may be the case when the transaction is between the estate and the trustee or the trustee derives some sort of benefit from the transaction. Transferring assets to yourself often triggers further inquiry from beneficiaries, so it is important to be transparent. It is important to demonstrate the trustee or executor fulfilled the fiduciary responsibilities to the beneficiaries.
The best release comes with an informal accounting, which provides a summary of what property went into the trust or estate inventory, what the expenses were, and what is the share for each beneficiary.
For more information dealing with selling property through estate administration or from a trust, contact the experienced estate planning attorneys at Stouffer Legal in the Greater Baltimore area.
