Legal Question in Wills and Trusts in California
Loan to beneficiary of a trust
If the trustee of an A-Trust agrees to loan one of the beneficiaries some money, which will be deducted from future inheritance after the surviving spouse dies (one of the children is serving as trustee), what is the best way to document this loan so that the trustee can show that the money given to the beneficiary was a loan and not a gift.
Also, should the beneficiary getting the money sign a promissory note before getting the money or after getting the money? Is it possible to draft an agreement to evidence all future loans instead of having the beneficiary execute a new promissory note every time money is lent?
1 Answer from Attorneys
Re: Loan to beneficiary of a trust
A promissory note should be signed by the borrower/beneficiary before he/she gets the money, and a new promissory note should be signed for additional amounts loaned by the Trust.
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