Trust Loan Agreement for the United Kingdom

Trust Loan Agreement Template for England and Wales

A Trust Loan Agreement is a formal legal document governed by the laws of England and Wales that establishes the terms and conditions for a loan between trusts or involving trust assets. It incorporates specific provisions required under trust law, including trustee powers, duties, and protections, while ensuring compliance with the Trustee Acts and related legislation. The agreement details loan terms, security arrangements, and necessary trust-specific representations and warranties.

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What is a Trust Loan Agreement?

A Trust Loan Agreement is essential when structuring loans involving trust assets under English and Welsh law. This document is typically used when one trust lends to another, or when trust assets are used as security for borrowing. The agreement must carefully balance trustee duties under the Trustee Acts with commercial lending requirements, incorporating specific provisions for trust asset protection, beneficiary interests, and trustee liability limitations. It includes detailed terms covering loan amount, interest, repayment, security, and trust-specific representations and warranties.

What sections should be included in a Trust Loan Agreement?

1. Parties: Identification of the lender trustee(s), borrower trustee(s), and any other relevant parties

2. Background: Context of the trust, purpose of the loan, and relevant trust arrangements

3. Definitions: Key terms used throughout the agreement including relevant legislative references

4. Loan Details: Amount, purpose, interest rate, and repayment terms

5. Security Arrangements: Details of any security provided for the loan

6. Representations and Warranties: Standard trustee declarations and confirmations

7. Covenants: Ongoing obligations of the borrowing trustee

8. Events of Default: Circumstances triggering loan acceleration or enforcement

What sections are optional to include in a Trust Loan Agreement?

1. Interest Rate Adjustment: Mechanisms for adjusting variable interest rates and calculation methods

2. Early Repayment: Terms and conditions for early loan settlement including any penalties or fees

3. Trust Beneficiary Consents: Provisions regarding required consents from trust beneficiaries

What schedules should be included in a Trust Loan Agreement?

1. Schedule 1 - Loan Terms: Detailed loan conditions and repayment schedule

2. Schedule 2 - Security Details: Full description of security arrangements if applicable

3. Schedule 3 - Trust Deed Extract: Relevant provisions from the trust deed authorizing the loan

4. Appendix A - Form of Drawdown Notice: Standard form for requesting loan disbursements

5. Appendix B - Form of Compliance Certificate: Template for periodic compliance confirmation

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

England and Wales

Publisher

Genie AI

Document Type

Finance Agreement

Cost

Free to use
Relevant legal definitions
Clauses
Industries

Trustee Act 1925: Core legislation defining trustee powers and duties, setting out investment powers, and establishing the liability framework for trustees

Trustee Act 2000: Modern update to trust law covering trustee duty of care, investment powers, and delegation of trustee functions

Law of Property Act 1925: Fundamental property law legislation relevant for security arrangements and property rights in trust contexts

Financial Services and Markets Act 2000: Regulatory framework for financial services, particularly relevant if the trust loan involves regulated activities or professional trustees

Consumer Credit Act 1974: Legislation governing consumer credit arrangements, applicable if the loan has any consumer element or involves individual beneficiaries

Common Law Trust Principles: Established legal precedents covering fiduciary duties and trust construction rules

FCA Regulatory Requirements: Financial Conduct Authority regulations, including anti-money laundering and Know Your Customer (KYC) requirements

Income Tax Act 2007: Tax legislation relevant for income generated from trust loans and related activities

Taxation of Chargeable Gains Act 1992: Legislation governing capital gains tax implications for trust assets

Inheritance Tax Act 1984: Tax legislation relevant for trust arrangements that may have inheritance tax implications

Limitation Act 1980: Legislation establishing time limits for claims and enforcement of trust-related matters

Contract Law Principles: Fundamental legal principles governing contract formation, including offer, acceptance, consideration, and intention to create legal relations

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