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Hi, this is Keith Davidson with Albertson & Davidson. In this video, we’re discussing the trustee’s sale of assets.
If a trustee sells a trust asset, can you reverse that sale? Can you bring the asset back into the trust? And the answer, generally speaking, is no. Typically when a trustee sells property, the beneficiaries will not be able to recover that property back to the trust. And this is because most trust documents and the California Probate Code give the trustee the authority to sell assets.
Now there are some limitations. For example, a trustee must sell the asset for a fair market value. They have to act reasonably. But even if the trustee sells an asset for less than fair market value, that doesn’t mean that the beneficiaries will be able to get the property back. They might be able to get damages against the trustee for selling the asset too low, but it doesn’t necessarily mean the property will be coming back.
If the trustee was perpetrating some sort of fraud on the trust, and did a sale to a third party but it actually was a related party to the trustee, because it was part of the fraudulent scheme, then the beneficiaries may be able to recover an asset and bring it back into the trust. It really just depends on the facts and circumstances.
But those types of cases happen very rarely. Typically, a trustee is going to have the right to sell trust assets as long as they sell it for fair market value, they’re not going to get in trouble for selling trust assets. And even if they do sell it for less than fair market value, it will be a damage claim against the trustee. The trustee will have to pay money. It won’t necessarily be a recovery of the asset and bringing it back into the trust.