Managing and Selling Trust Property

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If you own property in Atlanta and it’s held inside a trust, you may be wondering what happens next. Can the trustee sell it? Do the beneficiaries have a say? What does Georgia law actually require? These are fair questions, and the answers matter, especially when real money and family relationships are on the line. At Slowik Estate Planning, located in Atlanta, Georgia, we help families understand how trust property works, what trustees can and cannot do, and how to move forward with confidence under Georgia law.

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What Georgia Law Says About Trust Property

Before you can manage or sell trust property, you need to understand who legally controls it. In Georgia, that answer comes from the Revised Georgia Trust Code of 2010, found in O.C.G.A. Title 53, Chapter 12. This law governs how trusts are created, administered, and terminated across the state.

When property is placed into a trust, the trustee holds legal title to it. The trustee is not the owner in the traditional sense. Instead, they manage the property for the benefit of the trust beneficiaries. That distinction matters a great deal when it comes time to sell or manage the property.

Under O.C.G.A. § 53-12-261, a trustee of an express trust, without court authorization, is authorized to sell, exchange, grant options upon, partition, or otherwise dispose of any property or interest therein at public or private sale, upon such terms and conditions as the fiduciary deems advisable, and to transfer and convey the property free of all trust. That is a broad grant of authority, but it is not unlimited. Every power the trustee exercises must still line up with their fiduciary duties to the beneficiaries.

Georgia also recognizes different types of trusts, including revocable living trusts, irrevocable trusts, testamentary trusts, and spendthrift trusts. Each type carries different rules around how property can be managed and sold. For example, with a revocable trust, the grantor typically keeps control during their lifetime. With an irrevocable trust, the rules are stricter. Understanding which type you are dealing with is the first step to knowing what is allowed.

If you are a trustee or a beneficiary and you are unsure what the trust document allows, the team at Slowik Estate Planning can review your specific situation and help you understand your rights and obligations under Georgia law. Do not guess when real property is at stake.

The Trustee’s Role in Managing Trust Property

Being named a trustee is a serious responsibility. Georgia law makes that clear. A trustee has a fiduciary duty, meaning they must act in the best interests of the beneficiaries at all times. That applies to every decision they make about trust property, including whether to hold it, rent it, improve it, or sell it.

A trustee is legally obligated to administer the trust in good faith, manage assets prudently, maintain records, and ensure distributions align with the grantor’s instructions. They must act with loyalty, impartiality, and diligence, avoiding conflicts of interest. In Georgia, failing to meet these standards can lead to serious consequences.

Under O.C.G.A. § 53-12-300, a trustee who violates any obligation owed to the beneficiaries may be found in breach of trust. Trustees have legal obligations to the trust and can face legal repercussions if they breach fiduciary responsibilities or disregard the law. Under Georgia Code § 53-12-300, a trustee may be in breach of trust if they violate any obligations owed to the beneficiaries.

So what does day-to-day management of trust property actually look like? It means keeping up with property taxes, maintaining insurance on real estate, collecting rental income if applicable, and making decisions about repairs or improvements. At the beginning of trust administration, the trustee should inventory all the trust’s assets. As part of the trust administration process, the trustee should inventory all the trust’s assets, including identifying and appraising all assets held within the trust, such as investments, personal property, and real estate.

Trustees can also hire professionals to help. A trustee may employ and compensate, out of income or principal or both, persons deemed needful to advise or assist in the administration of the trust, including agents, accountants, brokers, attorneys at law, investment brokers, rental agents, realtors, appraisers, and tax specialists. This means you do not have to do everything alone, but you are still responsible for the decisions made on behalf of the trust.

If you are serving as a trustee and need guidance on your duties, reach out to Slowik Estate Planning. We can walk you through what Georgia law requires and help you avoid costly mistakes during trust administration.

How to Sell Property Held in a Georgia Trust

Selling real property held in a trust is different from selling property you own personally. The process has specific steps, and skipping any of them can create problems at closing or even expose the trustee to liability. Here is what you need to know.

First, the trust document must authorize the sale. As discussed above, O.C.G.A. § 53-12-261 gives trustees broad authority to sell trust property without needing court approval. However, the trust document itself may include restrictions on when or how property can be sold. Always read the trust instrument carefully before listing the property.

Second, the property must be properly titled in the name of the trust. When using trusts in estate planning, a key element includes transferring the trustmaker’s real estate into the trust by recording a deed with the local recording authority. If the deed was never updated to reflect the trust as owner, the trustee may not have the legal authority to sell it without additional steps, and the property could end up in probate.

Third, the trustee must present a certification of trust to the buyer or closing attorney. The trustee may present a certification of trust to any person other than a beneficiary in lieu of providing a copy of the trust instrument to establish the existence of the trust provisions. The certification of trust should contain information including that the trust exists and the date of the trust and any amendments, the identity and address of each current trustee, the relevant powers of the trustee and any restrictions or limitations on those powers, and the revocability or irrevocability of the trust.

After the sale, the proceeds stay inside the trust. The trustee lists the property for sale and handles all aspects of the transaction, including negotiating offers, signing contracts, and overseeing the closing. After the sale is complete, the proceeds are typically held in the trust, and the trustee distributes them according to the trust’s terms. Trustees cannot simply pocket the proceeds or distribute them without following the trust document.

Slowik Estate Planning can help you move through this process correctly, whether you are a trustee preparing to sell or a beneficiary who wants to understand what happens to the sale proceeds.

Tax Considerations When Selling Trust Property in Georgia

Selling trust property can trigger tax consequences at both the state and federal level. Understanding these rules ahead of time can save you and the beneficiaries a significant amount of money. Georgia does not have a state estate or inheritance tax, which is good news. But federal taxes are still very much in play.

Georgia does not impose a state estate or inheritance tax, but trust assets may be subject to federal taxation. During the grantor’s lifetime, the trust is a disregarded entity for tax purposes, meaning income generated by trust assets is reported on the grantor’s personal tax return. Once the grantor passes away, the tax picture changes.

One of the most important tax concepts in trust property sales is the cost basis. The basis of a property determines how much gain is recognized when it is sold. For assets passing through certain trusts, the IRS rules can be complex. Under IRS Rev. Rul. 2023-2, the IRS clarified that assets held in an irrevocable grantor trust do not automatically receive a stepped-up basis at the grantor’s death if those assets are not included in the grantor’s gross estate for federal estate tax purposes. In other words, if someone transfers property into an irrevocable trust as a completed gift, the basis of that property does not reset to fair market value when the grantor dies. That can result in a larger capital gains tax bill when the property is later sold.

This is a meaningful distinction from assets that pass through a will or a revocable trust, where the step-up in basis under IRC § 1014(a) often applies. If trust assets are sold, capital gains tax implications must be considered. Beneficiaries do not owe state taxes on their inheritance, but income earned from trust investments after the grantor’s passing may be taxable.

If the trust remains active after the grantor’s death and generates taxable income, the trustee must file IRS Form 1041. Working with a qualified estate planning attorney and a CPA is the right move here. The team at Slowik Estate Planning works closely with tax professionals to help clients understand the full picture before a sale is completed.

Protecting Beneficiaries During the Sale of Trust Property

Beneficiaries have rights, and Georgia law takes those rights seriously. If you are a beneficiary of a trust that holds real property in Atlanta, you are entitled to know what is happening with that property. You also have legal tools available if you believe the trustee is not acting in your best interest.

Under O.C.G.A. § 53-12-243, trustees must provide written notice of their name and address to qualified beneficiaries within 60 days of accepting the trusteeship or becoming aware of the trust’s existence. This is just the starting point. Beneficiaries are also entitled to regular accountings of trust assets and distributions under Article 12 of the Revised Georgia Trust Code (O.C.G.A. §§ 53-12-230 through 53-12-232).

If a trustee sells trust property at below-market value, fails to disclose a conflict of interest, or distributes the proceeds incorrectly, that trustee may be in breach of their fiduciary duty. Too often, trustees breach their duties. Some of the most common ways they do this include breaches of trust, funds misappropriation, poor management, fraudulent acts, failure to act, and engagement with a competitor.

Spendthrift provisions, addressed in O.C.G.A. §§ 53-12-80 through 53-12-83, can add another layer of protection for beneficiaries. These provisions can prevent creditors from reaching a beneficiary’s interest in the trust before distributions are made. This is especially useful when a trust holds valuable real estate in a high-growth market like Atlanta.

Proper estate planning can also address unique situations, like what happens to a family pet or beloved animal companion when trust property changes hands. Planning for these scenarios in advance, including through pet guardianships, is something Slowik Estate Planning can help you think through as part of a complete estate plan.

Whether you are a trustee trying to do the right thing or a beneficiary who has questions, Slowik Estate Planning is here to help. We encourage you to review your wills and trust documents regularly to make sure they still reflect your wishes and comply with current Georgia law. Contact our Atlanta office today to schedule a consultation.

FAQs About Managing and Selling Trust Property in Atlanta, Georgia

Can a trustee sell trust property without the beneficiaries’ consent in Georgia?

In most cases, yes. Under O.C.G.A. § 53-12-261, a trustee of an express trust has broad authority to sell trust property without court authorization and without the direct approval of the beneficiaries. However, the trustee must still act within the terms of the trust document and in accordance with their fiduciary duty to the beneficiaries. If the trust document places restrictions on sales, those must be followed. Beneficiaries who believe a sale was improper have the right to challenge it under Georgia law.

What happens to the sale proceeds after trust property is sold?

After a trustee sells property held in a trust, the proceeds remain inside the trust. The trustee does not distribute them personally or use them for their own benefit. Instead, the trustee must follow the trust document to determine how and when the proceeds are distributed to the beneficiaries. If the trust document is unclear, a court may need to step in to resolve the question. This is one reason why having a clearly written trust document is so important from the start.

Does selling property inside an irrevocable trust trigger a step-up in basis?

Not necessarily. Under IRS Rev. Rul. 2023-2, assets held in an irrevocable grantor trust that were transferred as a completed gift do not automatically receive a stepped-up basis at the grantor’s death, because those assets are not included in the grantor’s gross estate under federal estate tax rules. This means the property retains its original cost basis, which could result in higher capital gains taxes when it is sold. This is a key reason to work with both an estate planning attorney and a tax professional before structuring or selling trust assets.

What is a certification of trust and why does it matter when selling trust property?

A certification of trust is a document the trustee provides to third parties, such as buyers or title companies, to confirm the trust exists and that the trustee has authority to act. Under O.C.G.A. § 53-12-280, the certification includes information about the trust’s existence, the trustee’s identity, and the scope of the trustee’s powers. It allows the trustee to complete a real estate transaction without handing over the full trust document, which protects the privacy of the trust’s terms. Buyers and closing attorneys in Georgia routinely rely on this document.

How can Slowik Estate Planning help me with trust property in Atlanta?

Slowik Estate Planning, based in Atlanta, Georgia, works with trustees, grantors, and beneficiaries on all aspects of trust property management and sales. We help clients understand their rights and duties under the Revised Georgia Trust Code, review trust documents for clarity and compliance, and guide families through the process of selling trust-held real estate. We also help clients plan ahead so that their trusts are properly funded, clearly written, and structured to meet their goals. Contact us to schedule a consultation and get straightforward answers about your specific situation. Past results in any matter do not guarantee similar outcomes in future cases.

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