The Family Trust Paid for the Renovations. The Trustee Paid for the Lawsuit.
Background
Three siblings were equal beneficiaries of a trust (the Trust) holding two family properties located across the road from one another in Hancock.
One sibling, Trustee, wore two hats: beneficiary and trustee. He was required to divide the Trust’s assets equally and treat his siblings impartially.
One house, the Family House, had been in the family for more than a century and had primarily served as the family’s summer home.
In 2020, Trustee purchased a second house, the Trustee’s House, on his mother’s behalf while she was still alive using her funds. The mother died in 2021.
Before and after her death, Trustee used Trust money to fund significant renovations to the Trustee’s House, where he and his wife resided.
Trustee filed a partition petition asking the court to award him the Trustee’s House outright and order the sale of the Family House.
His sister (Sister) wanted the Family House, the property to which she had the deepest connection.
She counterclaimed that Trustee had breached his fiduciary duties by placing his own interests ahead of those of the other beneficiaries.
Probate Court
Sister argued that Trustee had used his position to enrich himself and that the Family House should be awarded to her. The Trustee argued for sale of the Family House and defended his conduct.
After a four-day trial, the probate court sided with Sister on every meaningful point.
In a partition case, the court has broad power to do what is fair: it can divide the property instead of selling it, giving one parcel to one party and another parcel to another, then evening things out so each beneficiary ends up with their rightful share.
That is what the court did here. It awarded the Family House to the Sister and the Trustee's House to Trustee, then equalized the distribution by charging each of them for the value of the house they received.
For the Trustee's House, though, the value ran higher. The court added back both the Trust-funded renovations and the rent the Trustee should have paid for his years of rent-free occupancy.
So the Trustee could keep the house, but not the windfall.
The court then found that the Trustee breached his fiduciary duties. He had refused without a legitimate basis to give Sister the property she wanted, and he had occupied Trust property without paying for it - elevating his personal interests over the loyalty and impartiality he owed the beneficiaries.
The third sibling, a brother (Brother), received no real estate. The ruling implied that his one-third share would come out of the Trust's remaining assets once the houses were accounted for.
As a remedy, the court ordered Trustee to personally repay the Trust for all attorney's fees and expenses the Trust had spent on the litigation.
Trustee and Brother appealed. (Brother appealed because he feared the order had cut out his one-third share.)
Supreme Court
The Court affirmed.
The record supported the probate court's findings: neither brother wanted the Family House, it had been in the family for over a century, Sister had the strongest connection to it, and the Trust had enough other assets to make the distribution fair.
The Court refused to reweigh those equities.
The Court left the attorney’s fee award undisturbed. The Trustee did not dispute that he owed the Trust for fees spent litigating the matters he lost. He argued only that the court should have carved out fees tied to the parts of the case that did not go against him - but he had never raised that point before the probate court, so the Court declined to consider it.
The Court also rejected the Brother's claim that the trial court had cut out his one-third interest. The partition order still required the trustee to account for the Brother's share when distributing the rest of the Trust. (I.e., the Brother had misread the probate court order as finding he had given up his share.)
Key takeaway
A trustee cannot move into trust real estate, use trust funds to renovate it for personal benefit, and then file a partition petition to lock in that result.
When a court sees that pattern, the exposure can run on two fronts at once: the trustee's chosen parcel may be revalued upward to account for trust-funded improvements and imputed rent for years of free occupancy; and the trustee may be ordered to personally reimburse the trust for litigation fees and expenses paid with trust funds to defend those actions.
Self-dealing dressed up as a neutral partition action is not a strategy.
It is a bill.
Moffat v. Srebro, 2026 N.H. 25
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