Updated August 16, 2026
Mechanically it is close to an ordinary sale — the trustee signs instead of an individual owner, and title insurance requires proof that the trustee actually has the authority to sell. The complications are rarely legal and almost always human: a successor trustee who is also one of several beneficiaries, siblings who disagree about price or timing, and a trust document that says less than everyone assumed about who decides. On a revocable living trust with the original settlor alive and serving as trustee, this is a non-event. On an irrevocable trust after a death, with multiple beneficiaries and a professional or family trustee, the process questions matter as much as the market ones.
The trust document, or a certification of trust. Most trustees provide a certification of trust rather than the full document — it establishes the trust's existence, the trustee's identity, and the authority to convey without exposing the entire estate plan.
Proof of the trustee's authority to sell real property. Written into the trust instrument. Occasionally it is limited, conditioned on beneficiary consent, or requires co-trustee agreement.
Documentation of successor trusteeship, if applicable. A death certificate and an acceptance of trusteeship where the original trustee has died or resigned.
Confirmation the property is actually in the trust. This is the one that catches people. A trust was drafted, but the deed transferring the building into it was never recorded. The building is then in the decedent's individual name and may require probate before it can be sold — which turns a 60-day escrow into a much longer process. Check the vesting on the deed early.
A trustee who is one of several beneficiaries. They owe fiduciary duties to the others, including the duty to obtain a fair price and to treat beneficiaries impartially. That has consequences for how the sale should be run: an open, documented marketing process protects the trustee personally in a way that a quiet off-market sale to a familiar buyer does not.
Disagreement about whether to sell at all. Some beneficiaries want cash, others want to keep the building. The trust document governs, but that rarely ends the argument.
Disagreement about price. The most common reason a trust sale stalls. A current, defensible, independent valuation is worth far more here than in an ordinary sale, because it converts an argument about opinion into a discussion about evidence.
A beneficiary who wants to buy out the others. Entirely workable, and common. It needs an arm's-length value and clean documentation precisely because the trustee is on both sides of the fairness question.
This is the practical point most trustees underappreciate. A trustee who sells the family building quietly to the first buyer who calls — even at a reasonable price — has no record demonstrating that the price was the best available. A trustee who runs a real marketing process, documents the offers received, and can show why the accepted offer was the best one has an evidentiary answer to any beneficiary who later says the building was sold too cheaply.
That is not a theoretical concern. Disputes among beneficiaries about whether a property was sold for enough are among the more common trust conflicts, and they surface after the money is distributed.
Step-up in basis. Property held in a revocable trust generally receives a basis adjustment at the settlor's death, which frequently means a sale shortly afterward produces little capital gain. This is often the single largest financial fact in the decision.
Property tax reassessment. Under Proposition 19, the reassessment on transfer to children applies regardless of the trust wrapper. A trust is a probate-avoidance and administration tool, not a property tax tool.
Measure ULA still applies. A trust sale inside the City of Los Angeles is a transfer like any other.
The 1031 question belongs to the trust. If the trust is exchanging rather than selling, the exchange has to be structured at the correct taxpayer level. Get the CPA involved before an offer is accepted, not after.
Confirm three things before you do anything else: that the deed actually puts the building in the trust, that the trustee has express authority to sell, and that the beneficiaries know the plan. Then get an independent, documented valuation and run a real marketing process — not because the market demands it, but because it is what protects the trustee and settles the family conversation with evidence rather than opinion.
Do all the beneficiaries have to agree to the sale?
Usually not. The trustee holds the authority to sell, subject to whatever the trust document says and to their fiduciary duties. Some trusts do require beneficiary consent. Unanimity is not generally required, but a trustee who proceeds over objections should be doing so on documented, defensible terms.
What if the building was never actually transferred into the trust?
Then it may sit in the decedent's individual name and require probate before it can be conveyed, which adds months and court oversight. Check the recorded deed early — this is discovered too late far more often than it should be.
Can the trust do a 1031 exchange?
Frequently yes, but it depends on the trust's structure and who the taxpayer is for the exchange. Some trusts are disregarded for tax purposes and some are not. This is a question to settle with the CPA before going to market, because it affects how the transaction is structured.
Michael Sterman is Senior Managing Director Investments at Marcus & Millichap.
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