A beneficiary of a discretionary trust wishes to borrow £50k from the trust (around a quarter of the total fund). The trust provisions are broadly drafted and empower the trustees to lend to a beneficiary, either with or without security and with or without interest. The trustees are happy to exercise this power for an unsecured interest free loan repayable on demand. Is it sufficient for this to be documented via a trustee resolution? Or might a simple exchange of letters suffice? Or are there strong reasons for a formal loan agreement to be put in place?
Many thanks for your thoughts!