Under what condition can a trustee loan funds to the trust?

A trustee has specific fiduciary duties under the law, and the management of trust assets, including loans, is subject to strict rules. Generally, a trustee cannot loan funds to the trust itself as this creates a conflict of interest. When a trustee loans money to the trust, they may be positioned to benefit personally from decisions about repayment and interest, potentially breaching their duty to act solely in the best interests of all beneficiaries.

In most jurisdictions, the law prohibits such transactions unless clearly allowed in the trust document or with explicit consent from all beneficiaries or court approval. This prohibition ensures that the trust assets are managed prudently and that the interests of the beneficiaries are protected.

Therefore, stating that a trustee is strictly prohibited from loaning funds to the trust reflects the legal standard set to avoid conflicts and maintain the integrity of trust management.