Family Trust Loan Agreement

When a person who receives payments or advances from a trust wishes to deposit them in the form of “loans” for tax purposes, the person must ensure that the payments are documented as an appropriate trade agreement. The agreement must include at least the following: a trust instrument usually contains a list of beneficiaries, but in the case of a discretionary trust, it is simply stated that any person who is a friend or family member of the single beneficiary is also considered a beneficiary. Advances from a trust to an individual must be scrutinized before they qualify as either “loans” or “income.” Using a mortgage broker who has experience in fiduciary loans will help you get approved for financing that works for you. The main reason most lenders don`t lend to trusts is that fiduciary loans are less profitable for them, as they do extra work in preparing mortgage documents and verifying the trust deed. Some trusts can allow you to transfer assets to future generations without paying excessive taxes or fighting over estates. Our credit agreement developed by our in-house experts covers a large number of types of lenders and borrowers, credit terms, additional advances and collateral options. The amount of the outstanding loan remains in the lender`s estate for IHT purposes. For example, many years ago, a person may have made a £100,000 loan that was not repaid. This £100,000 remains part of the lender`s IHT estate.