Can Property Left in Trust Be Sold in Illinois?

When setting up a trust, a common question is whether property held within it can be sold. For seniors planning to protect assets for Medicaid eligibility or ensure financial security for loved ones, this question is especially important. 

In Illinois, property in a trust can generally be sold, but the process depends on the type of trust and its specific terms.

At Woods & Bates, P.C., we understand the complexities of trust property and asset management. Whether you’re safeguarding assets for Medicaid or planning a smooth wealth transfer, our firm is here to provide thoughtful guidance.

Types of Trusts in Illinois

There are various types of trusts, each with distinct rules and implications. If you’re dealing with property held in trust, it’s important to understand the type of trust involved.

Revocable Trusts

A revocable trust allows the grantor (the person who creates the trust) to make changes or even dissolve the trust during their lifetime. This flexibility makes it easier to sell property held in a revocable trust. 

Typically, the trustee, who is often the grantor themselves during their lifetime, has the authority to manage and sell trust assets.

Irrevocable Trusts

Irrevocable trusts, on the other hand, are more rigid. Once the trust is created, the terms generally can’t be changed, and the grantor relinquishes control of the assets. 

Selling property held in an irrevocable trust requires strict adherence to the trust’s provisions and may involve additional steps to ensure compliance with Illinois law.

Living and Testamentary Trusts

Living trusts are created during the grantor’s lifetime, while testamentary trusts come into effect after the grantor’s death, typically through a will. The ability to sell property depends on the trust’s terms and the trustee’s responsibilities.

Selling Property Held in Trust: Important Considerations

When it comes to selling property held in trust, several factors come into play. Each trust is unique, so the process often depends on the terms outlined in the trust document.

Terms of The Trust

The trust document is your guiding light. It specifies whether property can be sold, under what conditions, and who has the authority to approve the sale. For example:

  • Trustee Discretion: Many trusts give the trustee broad authority to sell property as needed.
  • Beneficiary Consent: Some trusts require beneficiaries to approve a sale.
  • Restrictions on Sale: Certain trust provisions may limit the trustee’s ability to sell specific assets or may impose conditions on how proceeds must be used.

Ambiguities in the trust document can complicate the process, potentially leading to disputes among beneficiaries. That’s why clear communication and legal guidance are crucial.

Illinois Law on Trust Property

Under the Illinois Trusts and Trustees Act, trustees have a fiduciary duty to act in the best interests of the beneficiaries. This includes:

  • Acting with loyalty and prudence
  • Following the trust terms
  • Avoiding conflicts of interest

Trustees who fail to meet these obligations may face legal consequences, especially if they sell trust property in a way that harms beneficiaries or violates the trust’s terms.

Role Of The Trustee

A trustee’s duties extend beyond approving or overseeing the sale of trust property. They must ensure the transaction aligns with the trust’s purpose, benefits all beneficiaries, and complies with all applicable laws. 

The trustee’s attention to detail can significantly impact the outcome of a sale of trust property.

Scenarios Where Selling Trust Property Is Allowed

There are several common situations where selling property held in trust is not only permitted but may be necessary.

1. Beneficiary Requests

Beneficiaries may request the sale of trust property to meet specific needs, such as:

  • Covering education or medical expenses
  • Providing funds to purchase a home
  • Supporting family members

In such cases, the trustee must carefully evaluate the request, ensure it aligns with the trust terms, and document the decision-making process.

2. Investment Purposes

Selling trust property can be a strategic move to:

  • Diversify the trust’s investments
  • Take advantage of market opportunities
  • Replace underperforming assets with ones that offer better returns

Trustees often seek professional advice to evaluate these decisions and minimize tax implications.

3. Necessity and Best Interests

Sometimes, selling trust property is essential to protect the trust’s overall value or meet pressing needs. For example:

  • The property requires costly repairs.
  • Declining property values make holding onto it impractical.
  • Proceeds are needed to pay debts or support beneficiaries.

In such cases, the trustee must demonstrate that the sale is in the best interests of all parties involved.

Practical Requirements When Selling Trust Property

Selling trust property involves more than just finding a buyer. Trustees and beneficiaries must also address practical and legal requirements.

Disclosure Requirements

Illinois law requires full disclosure when selling residential property, including any known defects or environmental hazards. Non-compliance can lead to penalties or disputes that delay the sale.

Certificate of Trust

A certificate of trust verifies the trustee’s authority and ensures the trust’s legitimacy. Providing this document is often a prerequisite for completing a sale. Failing to present an accurate certificate can stall the process or even invalidate the transaction.

Protect Your Family’s Future with Woods & Bates, P.C.

At Woods & Bates, P.C., we understand that selling trust property can feel overwhelming, especially when you’re trying to protect your assets and plan for long-term care. 

Whether you need help interpreting a trust document, managing beneficiary requests, or addressing Illinois laws, our firm is here to provide clarity and guidance.

We offer flexible consultations—both virtual and in-person—so you can get the support you need on your terms. Contact us today at (217) 735-1234 to schedule a confidential consultation and take the first step toward securing your family’s future.