Under New York's Estates, Powers and Trusts Law section 7-2.4, every sale by a trustee "in contravention of the trust" is void. That one sentence explains why a NYC title company reads the trust agreement before it insures a sale out of a trust, and why the trustee's first job is not pricing the building. It is proving that the person signing the deed has the power to sign it.
I have sold property for trustees across three full market cycles, and the pattern repeats: the building is fine, and the paperwork is where the closing date slips. This guide walks through the order that keeps it on schedule.
If the property was moved into the trust during the owner's lifetime, the guide to moving an apartment into a living trust covers how that transfer was supposed to happen. This article starts where that one ends: the trust owns the property, and now it has to be sold.
Who has the authority to sell
The trust instrument controls. It names the trustee, the successor trustee, and the event that hands the job over, typically the grantor's death or documented incapacity. The grantor (the person who created the trust) is often the first trustee, and signs while alive and competent.
New York fills in the powers the document leaves out. EPTL section 11-1.1(b)(5)(B) authorizes every fiduciary, a term the statute defines to include trustees of express trusts, to sell trust property "at public or private sale, and on such terms as in the opinion of the fiduciary will be most advantageous to those interested therein." Two limits sit on that power. It applies "in the absence of contrary or limiting provisions" in the instrument, and it does not reach property the instrument specifically disposes of. If the trust says the building goes to a named child, the trustee's job may be to deed it to that child, not to sell it.
Revocable or irrevocable at the moment of sale
A revocable living trust is the grantor's property in another name. At the grantor's death it becomes irrevocable and a separate taxpayer. The IRS lists "a revocable trust that changes to an irrevocable trust" as one of the events that requires a new Employer Identification Number. So the first question on every trust sale is simple: is the grantor alive? The answer changes who signs, which taxpayer number goes on the closing documents, and whose tax return reports the gain.
What the title company and the buyer's attorney will ask for
Because a sale that breaks the trust's terms is void, the buyer's side wants to see the terms. Expect this list, and start gathering it before the property is listed.
| Document | Why it is needed |
|---|---|
| The trust agreement and every amendment, or a certification of trust if the title company accepts one | Shows the trustee's power to sell and any limits on it |
| The successor trustee's signed acceptance | Shows the new trustee actually took the job |
| Certified death certificate of the grantor, or the incapacity documentation the instrument requires | Proves the event that moved authority to the successor |
| The trust's EIN, once it is a separate taxpayer | Closing and tax reporting run under the trust's number, not the grantor's Social Security number |
| A trustee's deed (house, building, or condo) | The trustee conveys in a fiduciary capacity |
| Co-op: stock certificate and proprietary lease in the trust's name, plus board consent to the sale | A co-op sells shares and a lease, and the board approves the transfer |
The co-op line causes the most trouble: if the shares were never reissued to the trust, the trust does not own them, and the sale may need to run through the grantor's estate. For a house, condo, or building, the equivalent check is the deed on record: the ACRIS guide shows how to confirm the trustee, not the grantor personally, is the owner of record.
Court approval and beneficiary consent
This is the main practical difference from an estate. Property titled in a trust does not pass through probate, so the trustee generally sells without letters from Surrogate's Court and without a judge signing off on the price. An executor selling a house that was never put in a trust has to get appointed first, which the estate purchase guide explains from the buyer's side.
No court does not mean no one to answer to. Read the instrument for any required notice to beneficiaries, any required written consent, and any co-trustee who must also sign. A sale to the trustee personally, or to a relative of the trustee, is a separate problem and needs a conversation with the trust's attorney before anyone signs a contract.
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What the trustee owes the beneficiaries on price
A trustee is selling someone else's money. New York's prudent investor rule, EPTL section 11-2.3, requires a trustee to "exercise reasonable care, skill and caution" and says compliance is judged by "a standard of conduct, not outcome or performance." In plain terms, a trustee is not liable because the market softened. A trustee is exposed when there is no record of how the price was reached.
Build that record as you go: written comparables including pending and expired listings, every offer and why you countered or declined, and how long and where the property was marketed. When a beneficiary asks later why the building sold for what it did, the answer is a folder, not a memory. A free home value request is one written starting point, and an in-person walkthrough is the next.
Transfer taxes on the sale
Trust sales pay the same transfer taxes as any other sale to an outside buyer. The rates depend on property type and price.
| Tax | Property | $500,000 or less | Above $500,000 |
|---|---|---|---|
| NYC RPTT | 1, 2 or 3 family house, condo unit, co-op apartment | 1% | 1.425% |
| NYC RPTT | All other property, including a 4+ unit building | 1.425% | 2.625% |
| NYS transfer tax | All conveyances | 0.4% | 0.4% |
| NYS additional tax in NYC | Residential at $3,000,000 or more, other property at $2,000,000 or more | n/a | +0.25%, for 0.65% total |
Say, as an example, a trust sells a two-family house for $1,200,000. The city tax at 1.425% is $17,100 and the state tax at 0.4% is $4,800, so $21,900 comes off the top before any other closing cost. The city return is due within thirty days of the transfer. Run your own numbers on the NYC transfer tax calculator, and have the trust's attorney confirm which rate class the property falls in.
Income tax: the basis question decides the bill
Capital gain is the sale price minus basis, and how the trust was set up decides the basis.
- Revocable trust, grantor has died. IRC section 1014(b)(2) treats property the decedent put in a trust while keeping "the right reserved to the decedent at all times before his death to revoke the trust" as acquired from the decedent, and section 2038 keeps that property in the gross estate. The basis generally resets to fair market value at the date of death. A sale soon after often shows little taxable gain.
- Irrevocable trust funded by a completed gift. IRC section 1015 generally gives the trust the grantor's basis, often a purchase price from decades ago. The same sale can carry a large gain. Certain rights the grantor kept can pull the property back into the estate, which is a question for the tax preparer, not the broker.
- Revocable trust, grantor alive. The trust is disregarded for income tax and the sale is reported as the grantor's own sale.
One careful sentence on the home sale exclusion: IRC section 121 covers property "owned and used by the taxpayer" as a principal residence, so once the grantor has died and the trust is its own taxpayer, assume the exclusion is not available unless your tax professional confirms a specific basis for it. The capital gains guide covers the exclusion and the step-up in more depth.
After the closing: distributions and the trust's tax returns
The proceeds land in the trust's account. The trustee then distributes according to the instrument, which may mean outright shares or a continuing trust, and keeps a reserve for the tax returns before writing final checks.
Once the trust is its own taxpayer, the trustee files federal Form 1041, which the IRS says reports the trust's income, deductions and gains and "the income that is either accumulated or held for future distribution or distributed currently to the beneficiaries." The New York counterpart is Form IT-205, the Fiduciary Income Tax Return. Distributions generally shift taxable income to the beneficiaries, who receive a Schedule K-1 from the trust. The timing of distributions relative to the trust's tax year matters, so the accountant should see the closing statement before the money moves.
Trust sale versus estate sale
If you are not sure which one you are handling, check the deed or the stock certificate. Property titled in the trust is sold by the trustee under the instrument. Property still in the deceased owner's own name is sold by an executor or administrator appointed by Surrogate's Court, even when a trust exists for other assets. The inherited property page walks the estate side, and if the property came to the family through a no-consideration deed rather than a trust, the guide to selling a property transferred for $0 covers the basis trap in that route.
Before you list: the trustee's checklist
| Step | What to do |
|---|---|
| Obtain | The full trust agreement and amendments, your signed acceptance as trustee, certified death certificates, and the trust's EIN |
| Obtain | For a co-op, the stock certificate and proprietary lease, and the building's sale application package |
| Order | A date-of-death appraisal if the grantor has died, to document the stepped-up basis |
| Order | A title search to confirm the trustee is the owner of record, and written comparables for the pricing file |
| Confirm | Any notice or consent the instrument requires, and whether any beneficiary receives the property itself rather than proceeds |
| Confirm | With the accountant: basis, the transfer tax class, and the timing of distributions against the trust's tax year |
Selling a property as trustee or executor?
Milton Coste, Licensed Real Estate Associate Broker, licensed since November 2001 with more than 1,100 transactions across the five boroughs. I am not your attorney or your accountant, but I can help you build the pricing record a trustee needs and keep the sale moving while the paperwork comes together.
Start the Inherited Property WalkthroughThis is planning context, not legal or tax advice. Statutory citations are to EPTL sections 7-2.4, 11-1.1 and 11-2.3, NYC Administrative Code section 11-2102, NY Tax Law section 1402, and IRC sections 121, 1014, 1015 and 2038, with IRS guidance on new EINs for trusts and the IRS and New York descriptions of Forms 1041 and IT-205, all as of September 23, 2026. Transfer tax rates are those in effect on that date. What a title company or a co-op board requires varies by company and by building. Every trust instrument is different, and its terms control. Confirm your own position with a New York attorney and a tax professional before signing a contract of sale or distributing proceeds.
