Overview
A common misconception is that a home funded into a trust is automatically sold upon the grantor's death. In reality, the home does not automatically sell; instead, the Trustee is granted full discretion to manage, sell, or distribute the property based on the specific circumstances of the trust administration.
The Trustee’s Options
If your trust dictates that your estate should be distributed in equal shares (for example, 1/3 to each of your three children), the Trustee typically has four main paths for handling a home:
Liquidate (Sell): The Trustee sells the home and distributes the net cash proceeds proportionately to the beneficiaries.
Generate Income (Rent): The Trustee holds the property, rents it out, and distributes the rental income proportionately among the beneficiaries.
In-Kind Distribution: The Trustee deeds the property directly to the beneficiaries in their proportionate shares (e.g., all three children are added to the deed as 1/3 owners).
Equalization: If there are enough other assets (like cash or stocks), the Trustee may allocate the entire home to one child and give the other beneficiaries an equal value in cash or other investments.
What Factors Influence the Decision?
The "best path" usually depends on the liquidity of the trust and the needs of the beneficiaries:
Debts and Expenses: If the deceased person’s debts or taxes exceed the available cash in the trust, the Trustee may be required to sell the house to cover those liabilities.
Beneficiary Agreement: Often, the Trustee will consult with beneficiaries to see if one person prefers to keep the home while others prefer cash.
Platform Limitations & Custom Requests
Wealth.com trusts provide the Trustee with broad authority to make these decisions to ensure the best outcome for the estate.
Our platform is designed around these industry-standard best practices and does not currently support highly specific custom "strings" (for example: "Do not sell the house for 5 years" or "Child A has 30 days to buy out the others").
Need Custom Language? If you require specific restrictions or "Rights of First Refusal" that go beyond standard Trustee discretion, we recommend a referral to an attorney. We can facilitate this through our Wealth Preferred Attorney Network if desired.