What can be done to protect the remaining beneficiaries if one of them borrows from a Trust?

Get Legal Help Today

 Secured with SHA-256 Encryption

What can be done to protect the remaining beneficiaries if one of them borrows from a Trust?

Our mother, who is still alive, has set up a trust fund for her four adult kids. The Trust is divided up equally between the 4 of us. One of the siblings is struggling to pay his mortgage. If he barrows from the Trust (our mother), can the amount he borrows be deducted from the remaining Trust after mom dies? Is there a legal document he can sign, so the 3 other siblings are protected?

Asked on May 21, 2014 under Estate Planning, Idaho

Answers:

M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney

Answered 7 years ago | Contributor

As a general rule,  a trustee can loan money to any party - so long as it is reasonably secured and meets the requirement of the prudent investor rules. A trustee has a duty to act impartially to all beneficiaries so if she is going to loan him money she should speak with an attorney about creating a loan document for repayment (a note) and indicating in her Will or the trust document that if the money is not repaid it is deducted.  The law in your state will guide the wording and requirements for filing.  Good luck.


IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

Get Legal Help Today

Find the right lawyer for your legal issue.

 Secured with SHA-256 Encryption