NSW secondary beneficiary requesting advance

[Vivitravi]

Hi,
I am the executor and trustee of my fathers' will. As trustee, I am directed to "make such payments to my said son from time to time from the share or part solely for the maintenance, welfare and advancement in life of my said son in the sole discretion of my trustee and should my son die prior to the share being advanced to him I give the balance of the share to my grandchildren in equal shares"..... The money is held in a term deposit currently getting 0.7% interest
My brother is currently awaiting sentencing for a major crime with expected sentence to be 15-18 years (it is his fourth time being jailed for the same type of crime and at age 71, he may not live to be released)
One of the grandchildren who are to be beneficiaries has requested an advance on part of their expected share and have given guarantee that they will repay this money back into the account with interest (the % to be agreed).
Am I able to loan this money, as it would be gaining a higher interest rate than it is currently getting with the bank.
Thanks
Ali

 

[Tim W]

Short answer...
No. And even if you could, it's a really bad idea.


A couple of basics first...

Is your father deceased?
Has there a been a Grant of Probate?
(without those, you can't do anything. regardless)
Are you (still) acting as Executor, or now as Trustee?

Now....

Unless it's an express condition of the will,
your brother does not lose his entitlement
to the testamentary gift (however expressed)
just by being a convicted criminal.

Unless it's an express condition of the will,
your opinion of his prospective life span is irrelevant.

Further, there is no concept of "expected share"
of the kind the grandchild is asking about.

Further, I suggest that speculative lending is not consistent with
your duty as trustee to preserve the capital in the corpus of the trust.

Further, what is the nature of the proposed guarantee?
Words? Promises?
Anything less than a priority charge over existing, otherwise unencumbered, property of relevant value?
I ask because the way this question typically goes is that the borrower proposes
(but does not necessarily disclose until "the time")
that they plan to offset the debt to the estate (or any outstanding amount)
against whatever the borrower thinks he will inherit.
That's an management and accounting nightmare, and will cost the estate a lot deal with.
Especially when it turns out, as it usually does, that the borrower can't re-pay.

 

[Vivitravi]

Thanks Tim, wasn’t sure and working on the theory that if it makes one uneasy to to it, then it’s probably not good to do it