By Alejandro Hernandez III, J.D. Certified Probate & Trust Specialist | Real Estate Advisor | Beverly Hills · New York · Austin
Trustees are held to a high standard. The duty of care, the duty of loyalty, the obligation to act in the best interest of beneficiaries — these aren’t abstract principles. They have real consequences when real estate is involved, and the mistakes that trustees make in property dispositions can expose them to personal liability, beneficiary disputes, and court scrutiny that lasts years.
In my advisory practice, I work regularly with trustees, attorneys, and professional fiduciaries navigating estate and trust property decisions. The same mistakes come up again and again — not because trustees are careless, but because the process of selling real estate inside a trust is fundamentally different from a conventional sale, and most people don’t realize that until they’re already in it.
Here are the most common errors I see, and what sound advisory practice looks like instead.
1. Treating it like a normal real estate transaction
This is the foundational mistake. When a trustee lists a property, the rules that govern that sale are not the same rules that govern your neighbor selling their home.
A trustee selling real estate is subject to fiduciary duties that require — among other things — that decisions be documented, defensible, and made in the interest of all beneficiaries, not just the ones who are loudest or most present. The pricing strategy must be reasonable and supportable. The marketing process must be adequate. The timing decision must reflect considered judgment, not convenience.
When trustees approach a trust property sale the way they’d approach selling their own home — picking a broker based on personal relationship, accepting the first reasonable offer, moving quickly to close — they create exposure. Even if the outcome is fine, the process may not be defensible if a beneficiary later challenges it.
Sound advisory practice starts with understanding that the sale is a fiduciary act, not just a real estate transaction.
2. Conflating the broker’s role with the advisor’s role
A listing broker’s job is to sell the property. That is a legitimate and valuable function. But it is not the same as independent advisory guidance on whether to sell, when to sell, how to price, or how to structure the transaction to protect the trustee’s fiduciary position.
Trustees frequently rely entirely on the listing broker for strategic guidance — and brokers, no matter how capable, have an inherent interest in the transaction closing. They are not positioned to provide neutral, fiduciary-focused advice.
An independent real estate advisor — someone whose compensation is not tied to the transaction closing — can provide the objective analysis that trustees actually need: pricing judgment that is documented and defensible, market positioning guidance that reflects the specific constraints of a fiduciary sale, and process oversight that protects the trustee throughout.
This distinction matters enormously when beneficiaries later question whether the trustee got a fair price.
3. Underpricing to sell quickly — and not documenting why
Trustees often face pressure to liquidate estate assets quickly. Beneficiaries want distributions. There may be carrying costs accumulating on the property. Legal and administrative fees are ongoing. The path of least resistance is to price aggressively and close fast.
This can be entirely appropriate — but only if the decision is made deliberately and documented thoroughly.
An undocumented rush to sell at below-market value is one of the most common triggers for beneficiary claims against trustees. Even when the pricing was reasonable given the circumstances, the absence of documentation — a written valuation rationale, a record of the market analysis, notes reflecting the trustee’s consideration of alternatives — leaves the trustee exposed.
Sound practice means creating a record that demonstrates the trustee exercised judgment, considered the relevant factors, and made a decision that a reasonable fiduciary would make. The price may be the same either way. The documentation is what protects the trustee.
4. Ignoring cross-jurisdictional complexity
Estates frequently hold real property in multiple states. A trust administered in California may include a vacation property in Texas and an investment condo in New York. Each state has its own probate and trust real estate rules, its own court procedures for supervised sales, and its own tax implications.
Trustees who treat a multi-state estate as a single transaction — running everything through one broker, one attorney, one framework — often create problems that could have been avoided with coordinated advisory guidance from the outset.
This is particularly acute for California trustees dealing with New York real estate, where the Surrogate’s Court process and co-op board requirements add layers of complexity that California-based advisors often don’t anticipate.
5. Waiting until there’s a problem to bring in advisory support
By the time a trustee calls for help, it is often because a beneficiary has filed an objection, a court has raised questions, or an offer has fallen apart. Advisory involvement at that stage is damage control.
The value of independent advisory support is highest at the beginning — before the listing strategy is set, before the pricing is established, before the broker is selected, before the decisions that will later be scrutinized are made. Early advisory involvement creates the framework for a defensible process, not a retrospective justification for decisions already made.
A note on what “advisory” actually means in this context
Trustees sometimes ask me what an advisor does that a good attorney and a good broker don’t already cover. The answer is that attorneys focus on legal compliance and liability, brokers focus on executing the transaction, and neither is positioned — or compensated — to provide neutral, integrated strategic guidance that considers all three dimensions together: legal exposure, market dynamics, and fiduciary process.
That gap is where most trustee mistakes happen. And it is the gap that independent advisory is designed to fill.
Alejandro Hernandez III is a lawyer-trained strategic advisor and Certified Probate & Trust Specialist with more than 25 years of experience advising trustees, executors, attorneys, and high-net-worth families on real estate and fiduciary matters. He maintains offices in Beverly Hills, New York City, and Austin.
Advisory services are provided through ARH Real Estate Advisory Group and affiliated ARH entities. This post is for informational purposes only and does not constitute legal or tax advice. Alejandro Hernandez III, J.D. is not admitted to practice law in any state indicated; all services are offered in a non-legal advisory capacity.
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