Guide to investing as a trustee

xylophone

they are able to sign a simple agreement with you,

You are making this sound like a personal loan from the OP to the grandchild-apparently this is not the case.

The OP is

one of three trustees for a trust set up in my mum's will

All three Trustees must be in agreement about the making of any such interest free loan to each of the grandchildren.

Any loan agreement must be between the Trustees of the Trust and the grandchild (ren) in question.

It does not seem to me to be clear what would happen to the money should any of the three grandchildren not reach the age of contingency - is the cash to be split between the remaining beneficiaries or does it devolve upon any heirs or successors of the grandchild in question?

Particularly if the sums in question are substantial, I would clarify the position with the solicitor who drafted the will and have him draft any loan agreements.

Thrugelmir

xylophone wrote: »

It does not seem to me to be clear what would happen to the money should any of the three grandchildren not reach the age of contingency

In the case of my late mothers estate. It was determined that the money would be distributed to the other beneficiaries. Not just family members as she left specific %'s to named charities.

bowlhead99

xylophone wrote: »

You are making this sound like a personal loan from the OP to the grandchild-apparently this is not the case.

The OP is

one of three trustees for a trust set up in my mum's will

All three Trustees must be in agreement about the making of any such interest free loan to each of the grandchildren.

Any loan agreement must be between the Trustees of the Trust and the grandchild (ren) in question.

I wasn't suggesting that the trust fund's trustees made a loan of the trust's property to the grandchild.

That just gets into a whole can of worms about the scope of powers of investment granted to the trustee, and whether a personal loan to the beneficiary is a suitable use of the funds, and what interest rate for such a loan would be in the best interests of the eventual beneficiary (recognising that the eventual beneficiary may not in fact be the particular grandchild in question because the grandchild may not actually reach the age of 26, on which their beneficiary status is contingent). If the OP does not want to have to pay for a bunch of legal advice on these points, it's better to steer clear of that option altogether.

I was simply replying to the supplemental question of whether the OP could make a personal loan to the grandchild while the grandchild waits for the trust property to become available to them:

"If I lent them the money (4k per year) to invest in LISAs till their trust money comes through would it be best to do a legal document to say they would pay it back? If so, would a simple document signed by me and them, and witnessed be ok?"

- to which the answer is yes and yes.

LHW99

Don't have any knowledge of these things, but is this something where a deed of variation (for the will) be considered?

Malthusian

LHW99 wrote: »

Don't have any knowledge of these things, but is this something where a deed of variation (for the will) be considered?

The 17 year old can't consent to give up the share of the trust of which they are a beneficiary. So unfortunately not.

xylophone

the OP could make a personal loan to the grandchild while the grandchild waits for the trust property to become available to them:

Yes indeed - but is this what the OP is proposing?

Malthusian

Malthusian wrote: »

The 17 year old can't consent to give up the share of the trust of which they are a beneficiary. So unfortunately not.

I may have been too hasty there. You can execute a Deed of Variation within two years of the death. So there is the possibility that you could wait until their 18th birthday and then, with the consent of all three beneficiaries, execute a Deed of Variation, if you are still within two years at that time.

If this is possible the residual beneficiary(ies) of the estate will also need to consent - or whoever benefits if all three of them die before 26.

I don't know if this is how it works or whether all those affected by a Deed of Variation need to be over 18 at the time of death, so you will need to ask a solicitor.

Along similar lines, I am also wondering if, once the youngest turns 18, the three beneficiaries can jointly approach the trustees and say they want to wind up the trust and have it split equally between them, as per Saunders v Vautier. Possibly the residual beneficiary(ies) of the Will would need to join them in that request (their share is nil as long as any of the three are alive but they are still potential beneficiaries). If all three plus all the residual beneficiaries of the Will approach the trustees, then that appears to account for all the potential beneficiaries under the Trust and Saunders v Vautier should apply.

The younger beneficiaries would need to be fully aware that they are giving up their potential right to profit from the deaths of the other beneficiaries in exchange for access before 26, and the residual beneficiaries would need to be aware that they are giving up their (hopefully rather remote) chance of an extra payout for nothing.