Can You Spare a Dime? Can A Trustee Loan Money to a California Trust?

[Music] Clevis Keith Davidson from Albertson and Davidson in this video I'm discussing whether or not a trustee can loan money to the trust so let's say a trust is short on cash it owns real property maybe it on some other illiquid asset of business and they need to pay some expenses and so the trustee wants to loan the trust money and get back pay back at a later date the problem with any type of transaction between the trustee and the trust is it violates the trustees duty to avoid conflicts of interest a trustee has to remain neutral it cannot have a conflict with the trust and any time the trustee enters into any type of transaction with the trust it is by definition a violation of the trustees conflict of interest duty it cannot do those type of transactions so that means that the trustee would have to take an extra step if the trustee wants to long the trust money which is you either have to go to court and get court approval or you'd have to fully disclose the transaction to the beneficiaries and get all of the beneficiaries consent so it is possible for a trustee to loan money to the trust but the trustee does need to be a little careful about how they do it because ultimately if the trustee wants to be paid back with interest there's going to be the potential that a beneficiary is going to say they charge too much interest or they didn't structure the deal properly and fairly to the beneficiaries and so in order to avoid those type of conflicts the trustee number one should just not loan money to the trust try to get a loan from some other source or number two if that's the only option available then the trustee really needs to be careful and make sure that everything is fully disclosed to the beneficiaries and that everybody has consented to it before following through on the transit. [Music] [Applause] [Music]