Can a Trustee Sell Trust Property Without the Beneficiaries' Consent?

A "for sale" sign has gone up in front of the house you grew up in. Your father's trust owns it, your stepmother is the trustee, and nobody asked what you thought. Can she do that?

Usually, yes. Under RCW 11.98.070, a Washington trustee has discretionary power to sell and convey trust property, and no Washington statute makes the beneficiaries' consent a condition of a sale. The power has limits, though. The trust's own terms can restrict it, a major sale can require twenty days' advance written notice under RCW 11.100.140, and a sale that benefits the trustee personally can be undone under RCW 11.98.078.

Where Does the Power to Sell Come From?

RCW 11.98.070 gives a trustee, in addition to the authority otherwise given by law, discretionary power to "acquire, invest, reinvest, exchange, sell, convey, control, divide, partition, and manage the trust property in accordance with the standards provided by law." RCW 11.100.140 confirms the point: except for the non-routine transactions it defines, a trustee is not required to notify beneficiaries of an intended action, to obtain an independent appraisal, or to sell on the open market.

What if the Trust Says Otherwise?

The statutory powers are defaults. Under RCW 11.97.010, the terms of the trust control when they conflict with the statutes, and the person who created the trust can alter or deny any of the powers the statutes confer. A trust can forbid the sale of the family cabin, require the consent of a named person, or direct that a particular property go to a particular child. A trustee who sells in the face of terms like those is breaching the trust, so the first step in any dispute over a sale is to read the document.

The Twenty-Day Notice Rule for Major Sales

RCW 11.100.140 requires advance notice of what it calls significant non-routine transactions. The main category is real estate: "any sale, option, lease, or other agreement, binding for a period of ten years or more," dealing with an interest in real estate whose value is 25 percent or more of the net fair market value of the trust principal at the time. Real estate the trustee purchased and a vendor's interest in a real estate contract are excluded. The statute expressly includes sales and uses a ten-year duration requirement. A trustee considering an outright sale at or above the 25 percent threshold should have the notice requirement reviewed before signing a binding agreement. Providing the statutory notice and obtaining an independent appraisal or selling on the open market is the cautious course when coverage is uncertain. The other categories cover a sale of tangible personal property worth 25 percent or more of trust principal, and certain sales of closely held or controlling stock.

Before entering into one of these, the trustee must give written notice of the material facts of the intended transaction. The notice goes to the trustor, if living, and to each person eighteen or older to whom trust income is presently payable, or for whom it is presently being accumulated, whose address the trustee knows. The attorney general also gets notice if the trust is charitable. The notice must be sent by certified mail, return receipt requested, or personally served, at least twenty days before the trustee enters into any binding agreement. For the real estate category, the trustee must also either obtain an independent appraisal or sell in an open-market transaction.

Three details matter. First, this is a right to notice, not a veto. The twenty days give a beneficiary time to ask questions or go to court, but the trustee does not need a yes. Second, the people entitled to notice can waive the requirements in writing, and a trustee who believes immediate action is needed to avoid significant harm to the trust must still give the notice but does not have to wait out the twenty days. Third, look at who is missing from the list: beneficiaries who take only later. Children from a first marriage who inherit after a surviving spouse's lifetime interest ends are not entitled to this particular notice.

When a Sale Crosses the Line

A trustee may not sell to benefit the trustee. RCW 11.98.078 requires a trustee to administer the trust solely in the interests of the beneficiaries. A sale that the trustee enters into for the trustee's own account, or one otherwise affected by a conflict between the trustee's personal and fiduciary interests, is voidable by an affected beneficiary unless an exception applies, like authorization in the trust, court approval, or the beneficiary's informed consent. A sale to the trustee's spouse, descendants, siblings, or parents is presumed conflicted unless the trustee shows it did not harm the beneficiaries.

Price and process matter as well. A trustee must manage trust assets as a prudent investor would under RCW 11.100.020, so a careless sale below market can be a breach even when no notice rule applies. The consequences are covered in can a trustee be held personally liable in Washington.

Is the Person Who Created the Trust Still Alive?

If the trust is revocable, the analysis changes. Under RCW 11.103.040, while the trustor of a revocable trust is living, the trustee's duties are owed exclusively to the trustor, and the beneficiaries' rights are subject to the trustor's control. A parent who puts a house into a revocable living trust can still sell it without asking the children. Their rights begin when the trust becomes irrevocable, typically at the parent's death, as described in what happens to a living trust when someone dies.

What Can a Beneficiary Do About a Sale?

Start by asking. Under RCW 11.98.072, a trustee must keep qualified beneficiaries reasonably informed of the material facts they need to protect their interests, and must respond promptly to a beneficiary's request for information about the administration of the trust unless that is unreasonable under the circumstances.

If the answers are not good enough, a beneficiary can file a petition in superior court under RCW 11.96A.080. The matters a court can decide in that kind of proceeding include directing a trustee to do or to refrain from doing a particular act, so a judge can be asked to stop a sale or put conditions on it.

Timing matters. RCW 11.98.105 protects a buyer who deals with a trustee in good faith and for value, without knowledge that the trustee is exceeding or misusing the trustee's powers. Once a sale to an outside buyer closes, the beneficiary's remedy is usually money from the trustee under RCW 11.98.085, or a petition to remove the trustee, not getting the property back.

A Worked Example

Megan, age 30, receives the income from her late grandmother's trust for life. Her uncle Tom is trustee. The trust's largest asset is a house in Edmonds worth about 40 percent of the trust, and the trust does not restrict a sale. Tom can sell without Megan's consent. To protect the trust and follow the notice procedure, Tom first sends Megan written notice of the intended sale by certified mail, waits at least twenty days before signing any binding agreement, and sells on the open market. If Tom instead sold it privately to his own son, the sale would be presumed tainted by a conflict, and Megan could ask a court to void it.

Get Answers Before the Closing Date

A worried beneficiary has the most options before a sale closes, and a trustee is best protected when the notice and the process are done right. The Law Office of Chad Foster can review the trust and the proposed sale with you. Call 425.785.8679 to talk with a Snohomish County estate planning and probate attorney.