Trust Promissory Note for the United Kingdom

Trust Promissory Note Template for England and Wales

A Trust Promissory Note is a hybrid legal instrument under English and Welsh law that combines elements of both trust law and negotiable instruments. It creates a legally binding promise to pay a specified sum while holding that promise in trust for beneficiaries. The document incorporates trust obligations governed by the Trustee Act 2000 and promissory note requirements under the Bills of Exchange Act 1882, creating a structured arrangement for secured or unsecured debt obligations held in trust.

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What is a Trust Promissory Note?

A Trust Promissory Note is commonly used in England and Wales when there's a need to create a debt obligation that will be held in trust for specified beneficiaries. This arrangement is particularly useful in estate planning, family wealth management, and corporate restructuring scenarios. The document combines the certainty of a promissory note with the flexibility of trust arrangements, allowing for sophisticated financial structuring while maintaining legal protection for all parties. It must comply with both trust law requirements and negotiable instrument regulations, making it a specialized instrument that requires careful drafting to ensure enforceability.

What sections should be included in a Trust Promissory Note?

1. Parties: Identifies the trustee(s), beneficiary(ies), and maker of the note

2. Background: Context of the trust arrangement and promissory note

3. Definitions: Key terms used throughout the document

4. Promise to Pay: Core obligation to pay specified amount

5. Payment Terms: Amount, interest rate, payment schedule

6. Trust Declarations: Express declaration of trust and beneficial interests

7. Trustee Powers: Specific powers granted to trustees

What sections are optional to include in a Trust Promissory Note?

1. Security: Details of any collateral or security - include when note is secured

2. Default Provisions: Consequences of default - include when specific default terms are required

3. Assignment Provisions: Terms for transferring rights - include when assignment rights are to be included

What schedules should be included in a Trust Promissory Note?

1. Payment Schedule: Detailed payment dates and amounts

2. Trust Property Details: Specific description of trust property

3. Trustee Powers: Detailed list of trustee powers beyond statutory powers

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

Promissory Note

Sector

Banking

Cost

Free to use
Industries

Law of Property Act 1925: Key legislation governing property interests, including formal requirements for creation of interests in property and requirements for writing and signatures

Trustee Act 2000: Defines trustee's duties and powers, investment powers, and required standard of care for trustees

Bills of Exchange Act 1882: Establishes legal requirements for promissory notes, including their definition and essential characteristics

Three Certainties Doctrine: Common law principle requiring certainty of intention, subject matter, and objects for valid trusts

Fiduciary Duties: Common law principles establishing the duties and obligations of trustees towards beneficiaries

Rule Against Perpetuities: Common law rule limiting the duration of trust arrangements

Financial Services and Markets Act 2000: Regulatory framework for financial instruments and services, relevant if the note qualifies as a regulated financial instrument

Money Laundering Regulations 2017: Anti-money laundering requirements that may apply to the transaction

Consumer Credit Act 1974: Legislation governing consumer lending arrangements, if applicable to the trust promissory note

Limitation Act 1980: Establishes time limits for enforcement of legal rights and obligations

Insolvency Act 1986: Relevant provisions for handling defaults and insolvency situations

Tax Legislation: Various tax laws affecting trusts, including Income Tax and Capital Gains Tax implications

Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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