Trustee Personally Liable for Rent-Free Occupancy and Trust-Funded Renovations

A recent decision from the New Hampshire Supreme Court delivers a clear and costly reminder to trustees: living rent-free in trust-owned property and using trust funds for personal renovations constitutes a breach of fiduciary duty, and the trustee can be charged personally for both the improvements and the fair rental value.

The Facts

After their mother died, three siblings, Nathaniel Moffat, Sarah Srebro, and Matthew Moffat, became equal beneficiaries of the Pamela Dawson Moffat Revocable Trust. The Trust was the residuary beneficiary of their mother’s Maryland-probated estate and required equal distribution among the three children.  The Trust was apprently not funded with either of the properties, thereby necessitating probate.  The trust held two neighboring properties in Hancock, New Hampshire; the first being a longtime family summer home, and the second being a nearby house purchased in 2020 with the mother’s funds.

Nathaniel served as trustee. He moved into the nearby house, paid for substantial renovations with trust assets, and occupied the home rent-free for an extended period. When the siblings could not agree on how to divide the real estate, Nathaniel petitioned the probate court for partition. Sarah responded with counterclaims alleging multiple breaches of fiduciary duty.

The Probate Court conducted a four-day trial, the probate court exercised its equitable partition powers to award the summer home to , award the nearby house to Nathaniel, but charged Nathaniel with the value of the trust-funded renovations and the fair rental value of his rent-free occupancy, finding that he had breached his fiduciary duties by prioritizing his personal interests over those of the other beneficiaries, and further, ordered him to reimburse the trust for the attorney’s fees and costs incurred in the litigation.  The case was appealed. 

On July 7, 2026, the New Hampshire Supreme Court affirmed the probate court's ruling in full. The Court held that, the probate court acted within its broad equitable discretion in partitioning the properties, the court's findings of breach of fiduciary duty were supported by the record, specifically, the trustee’s decision to occupy trust property rent-free and to use trust funds for renovations that primarily benefited him, and that the probate court had proper subject-matter jurisdiction over the fiduciary-duty counterclaims, even though the trust contained a District of Columbia choice-of-law clause.  On a procedural basis, the Supreme Court found that certain challenges to the remedy (including fee awards) had been waived or not properly preserved for appeal.Why This Matters for Families and Trustees

Trustees often believe that because they are also beneficiaries, they can treat trust real estate more casually, especially a family home. This case firmly rejects that notion. A trustee who occupies trust property without paying rent or who spends trust money on improvements that primarily benefit himself can be surcharged for both the rental value and the cost of the renovations. The decision reinforces several core principles of trust administration that are especially relevant in aging-in-place and family-wealth planning:

• A trustee must act solely in the best interests of all beneficiaries.
• Self-dealing with trust real estate (even when the trustee is also a beneficiary) requires careful documentation, consent, or court approval.
• Probate courts have wide equitable authority to fashion practical remedies when siblings cannot agree on the division of trust property.
• Personal use of trust assets without proper accounting creates lasting financial and family consequences.

Conclusion

Parents who place a family home or vacation property into a revocable trust (or who fund a trust that later purchases real estate) should consider clear instructions about occupancy, rent, and improvements. Beneficiaries who serve as trustees must understand that the role carries strict fiduciary obligations, even toward siblings.  When family real estate is involved, proactive planning and transparent communication remain far less expensive than years of litigation and personal liability.

If you are serving as trustee of a trust that owns real property, or if your family is struggling with the division of trust-owned homes, consult experienced counsel before decisions about occupancy or renovations are made. As this case demonstrates, the cost of getting it wrong can be substantial.

Case: Moffat v. Srebro, 2026 N.H. 25 (July 7, 2026)