Sale of trust estate: Overview, definition, and example
What is sale of trust estate?
Sale of trust estate refers to the process of selling property, assets, or investments that are held in a trust. A trust estate is everything the trust owns—like real estate, stocks, or business interests. When a trustee sells part or all of those assets, it’s called a sale of trust estate.
The sale can happen for many reasons: to raise cash, pay debts, distribute funds to beneficiaries, or simply manage the trust more effectively.
Why is sale of trust estate important?
Trusts are often used in estate planning, family businesses, or investment management. The sale of trust estate allows the trustee (the person managing the trust) to keep the trust flexible and useful—whether that means liquidating an asset, rebalancing investments, or paying out what’s owed to others.
But it’s not just about selling stuff. The trustee must follow the rules laid out in the trust document and act in the best interest of the beneficiaries. If the sale isn’t handled properly—like selling at a bad price or without proper authority—it could lead to legal trouble or claims of mismanagement.
Understanding sale of trust estate through an example
Imagine your grandfather set up a trust that holds a vacation home and some rental properties. You’re named as one of the beneficiaries, and your aunt is the trustee.
The vacation home hasn’t been used in years and needs expensive repairs. After reviewing the trust terms and getting any required approvals, your aunt decides to sell it. The money from the sale goes back into the trust and is eventually shared among the beneficiaries (including you), according to the trust’s instructions.
That transaction—the sale of the vacation home—is a sale of trust estate.
An example of a sale of trust estate clause
Here’s how a clause about sale of trust estate might appear in a trust document:
“The Trustee shall have full power and authority to sell, exchange, or otherwise dispose of any real or personal property held in the Trust Estate, at public or private sale, with or without notice, and upon such terms as the Trustee deems advisable in the best interests of the beneficiaries.”
Conclusion
A sale of trust estate gives the trustee the ability to manage trust assets wisely and adjust to changing needs—whether that’s selling a property, cashing out investments, or reallocating funds. For beneficiaries and business owners tied to a trust, it’s important to understand when and how these sales can happen.
Done correctly, it helps preserve value and fulfill the trust’s goals. But it should always follow the trust’s terms and legal duties to make sure everyone’s interests are protected.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.