I'm the trustee of a trust. A family member of the beneficiary would like to make a loan from the trust. Is that wise to do?

Asked 11 months ago - Hyattsville, MD

This is a special needs trust.

Attorney answers (3)

  1. Thomas C Valkenet

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    Contributor Level 17

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    Answered . The terms of the Trust control how the money may be used, and you have a special duty (you are a "fiduciary") to observe the terms of the Trust document. Your discretion is likely very limited. And if the loan is to someone other than the beneficiary, and is not for the benefit of the beneficiary, it is very likely improper. Would you like a PG County referral? You are very much at risk if the loan is improperly made.

  2. Brandy Ann Peeples

    Pro

    Contributor Level 19

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    Answered . Your first obligation is to the trust -- not to the beneficiaries. In most cases, trust documents are clear on prohibiting loans except in exigent circumstances and even then, only to the beneficiary. To make a loan to a family member of the beneficiary would likely be highly improper.

    DISCLAIMER: Brandy A. Peeples is licensed to practice law in the State of Maryland. This answer is being provided... more
  3. James P. Frederick

    Contributor Level 20

    4

    Lawyers agree

    Answered . I would proceed with extreme caution. I would have a lawyer review all the facts of the situation to determine if this makes sense or not. Very likely, it would not be appropriate for you to lend the money.

    James Frederick

    ***Please be sure to mark if you find the answer "helpful" or a "best" answer. Thank you! I hope this helps. ******... more

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