united-states trusts-and-estates
Buying a house from a trust that you own
<p>Suppose that person X is the beneficiary and the sole trustee of an irrevocable asset protection trust. He is not the grantor of the trust. The trust has stocks, bonds and an house in it. Person X has the right to take assets from the trust. That is, if he wanted to he could just transfer the house to himself. Can person X buy the house from the trust at fair market value?</p>

<p>The primary question is why the trustee is disposing of the asset at all. The trustee has a particular fiduciary duty (we haven't seen the document so we have no idea what that duty is). It could be justified because, for example, the grantor needs cash for a brain operation. Self-dealing (acting in one's own interest, which is a conflict of interest), is prohibited for a trustee. With real estate, &quot;fair market value&quot; is a fluid concept, but within limits one can determine that a sale (to self) at $900,000 undervalued the house and that a sale to another would have garnered $1,100,000, therefore this would be an illegal self-dealing. However, the simple act of a trustees purchasing an asset from a trust that he is the trustee of is not categorially prohibited.</p>
