To begin I am a trustee to a irrevocable trust, which the grantor set up to transfer a couple of homes he owns. Now the trust says the trustee can buy and add property to the same trust for the benefit of the grantor. The trust grantor has come across a dirt cheap small business for sale (due to covid-19) which the grantor thinks would be a great investment opportunity, so he would like me to purchase the business on behalf of the trust and add the property to the same said irrevocable trust. My question is how do I as trustee go about formally and legally buying the business on behalf of the trust and adding the business asset to the irrevocable trust? I basically want to know do I simply have the trust purchase the business utilizing a business bill of sale document and keep it with the original trust document and that is it or do I need to do more like, add a addendum to the trust document along with adding the bill of sale to the trust or maybe need all the documents notarized etc. Thank you.
ANSWER BY MARGARET CROSS-BELIVEAU:
You should seek legal counsel. As you are Trustee, you have a fiduciary duty to the beneficiaries of the trust, not to the grantor. You must follow a prudent investment strategy otherwise, you can open yourself up for litigation from the beneficiaries if the business goes bankrupt. You need to take it seriously. You won’t be able to hide behind the excuse that the grantor told you to do it.
As far as purchasing a business, the trust would buy to business just the same as an individual. You should go to an attorney for that as well.
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Legal Disclaimer: Please note that this answer does not constitute legal advice, and should not be relied on since each situation is fact specific, and it is impossible to evaluate a legal problem without a comprehensive consultation and review of all the facts and documents at issue. This answer does not create an attorney-client relationship. A lawyer experienced in the subject area and licensed to practice in the jurisdiction should be consulted for legal advice.
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