ESTATE SALES & FAMILY TRUSTS

Estate Sales and Family Trusts: What Trustees and Beneficiaries Need to Know

A family trust is a legal arrangement in which property is held and managed by a trustee for the benefit of designated beneficiaries. Living trusts are commonly used in California to transfer property after death without putting those assets through formal probate.

When a trust includes the contents of a home, the trustee may eventually need to distribute, sell, donate, or otherwise dispose of that property. An estate sale can become an important part of that process.

Who Has Authority Over the Property?

The trustee is generally the person with authority to manage trust property.

After the creator of the trust dies, a successor trustee named in the trust typically assumes responsibility. The trustee must follow the terms of the trust and owes fiduciary duties to the beneficiaries.

This is an important distinction: beneficiaries inherit from the trust, but they do not automatically manage it.

A son, daughter, sibling, or other beneficiary ordinarily cannot independently hire an estate sale company or authorize the sale of trust property simply because they expect to inherit from the estate.

Are the Contents of the House Actually Part of the Trust?

Not necessarily.

The fact that a residence is titled in a family trust does not automatically answer who owns every object inside it. Furniture, artwork, jewelry, collections, vehicles, and other personal property should be reviewed separately.

Before an estate sale begins, the trustee should determine:

• what property belongs to the trust
• what has been specifically left to a beneficiary
• what beneficiaries are entitled to receive directly
• whether anything is jointly owned or belongs to someone else
• what property is authorized to be sold

Items intended for beneficiaries should be removed before the remaining household is released for liquidation.

Can a Trustee Hold an Estate Sale?

Generally, a California trustee has broad authority to manage and dispose of trust property, including selling property at a public or private sale. That authority remains subject to the terms of the individual trust and the trustee’s fiduciary responsibilities.

Unlike a probate estate, a properly administered living trust generally does not require routine court supervision. This can make liquidation considerably more straightforward.

The trustee should nevertheless confirm that the trust grants the necessary authority before committing property to an estate sale. Unusual restrictions, contested ownership, litigation, or disputes among interested parties may require legal guidance or court involvement.

What If the Beneficiaries Disagree?

Family members do not necessarily get an equal vote simply because they are beneficiaries.

The trustee is responsible for administering the trust according to its terms and must consider the interests of the beneficiaries impartially. A beneficiary may object to a trustee’s actions, but disagreement alone does not automatically transfer decision-making authority from the trustee to the family.

For example, one beneficiary may want the contents sold while another wants certain furniture retained. Those issues should be resolved before the property is placed into an estate sale.

A professional estate sale should never become the setting in which unresolved inheritance disputes are decided.

What If There Is More Than One Trustee?

This requires particular attention.

Under California law, when two or more trustees hold a power together, they generally must act unanimously unless the trust document provides otherwise.

If two co-trustees disagree about whether to hold an estate sale—or one wants Mercanti and another wants a different company—the trust document should be reviewed before either trustee acts independently.

Mercanti should receive authorization from the person or persons legally empowered to make the decision.

What Does Mercanti Need Before Beginning?

Before accepting a trust estate for liquidation, Mercanti needs a clearly authorized representative.

Depending upon the circumstances, this may include confirmation of:

• the acting trustee or successor trustee
• any co-trustees whose approval is required
• the trustee’s authority to sell the property
• which household contents are included in the liquidation
• which items have been reserved for beneficiaries or excluded from sale

Mercanti does not determine inheritance rights or resolve disputes between beneficiaries. Those matters should be settled by the trustee, the trust’s attorney, or the court when necessary before liquidation begins.

What Happens to the Sale Proceeds?

When trust property is sold, the proceeds remain part of the trust.

The estate sale company provides the trustee with the accounting and proceeds from the liquidation. The trustee is then responsible for administering those funds according to the trust—including payment of appropriate trust obligations and eventual distribution to beneficiaries.

This is one reason proper documentation is particularly important when an estate sale involves a trust.

Turning a Household Into a Managed Trust Asset

For a trustee, an inherited household can represent hundreds or thousands of individual objects that must somehow be identified, divided, sold, donated, and removed.

A professionally managed estate sale turns that physical property into an organized liquidation and documented proceeds that the trustee can administer.

Mercanti works with trustees, beneficiaries, attorneys, fiduciaries, families, and real estate professionals throughout the San Francisco Bay Area to manage trust-related estate liquidations from the initial evaluation through the final removal of remaining property.

Trustees considering an estate sale may begin with a complimentary estate evaluation from Mercanti.

This article provides general information and is not legal advice. Every trust is different. Trustees should consult the trust document and qualified legal counsel regarding their authority and obligations when necessary.