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trustee powers- maintenance and advancement - Coggle Diagram
trustee powers- maintenance and advancement
when trustees can apply income to maintain minor beneficiaries
income
dividends paid on shares
interest paid on bank accounts
rent paid for occupation of land
where income regularly produced
Ts can use bs income to pay
for their maintenance, education and benefit
if b under 18 (infant b) if the following conditions met:
a. no contrary provision in dec of trust
b. minor b must have interest in income i..e vested/contingent
cannot have a prior interest to income- remainder b in life interest trust
ts
discretion
whether to use income this way- can reject bs wishes
BUT- n
eed to accumulate income
i..e invest it for bs future benefit and then transfer that accumulated income with the trust capital to B when they call for the trust property on their 18th birthday
income should be paid to bs parent/guardian or to the maintenance, education or benefit provider e.g. school
when trustees must distrubute income to (contingent) adult beneficaries
adult contingent bs are entitled to trust income as it rises
, and
Ts must pay that income to them
, pending the vesting of their beneficial interest
e.g. when b turns 18 but doesnt reach vested interest age
Ts discretion to apply income ends- discretionary power is replaced with
duty to pay a trust income to be b as it arises until they reach specific age
when b attains condition e.g vested interest age
b can call for trust property to be conveyed to them- t
rust capital and any accumulated income
(from when minor) can be paid to her
if
adult contingent b dies before condition satisfied
, their estate will receive
nothing
- no capital and no accumulated income
when trustees can advance capital to beneficaries
-
s.32
minor B
if B seeks trust capital, the T should apply that capital for the b by
paying monies directly to 3rd party who will improve their material situation
discretionary power of T
6 ways of advancing capital to Bs
1. no contrary provision in dec of trust
2. b has interest in capital:
vested- in possession or in remainder
contingent
life interest trust- requires written consent of life tenant
3. payment must be for bs advancement or benefit
(improve material situation of b- but not leisure pleasure or hobbies)
capital advanced must benefit the b (either wholly or with incidential benefit to other person)
4. amount of bs enititlement
- decided when the testor dies (when will is created)
a)
trusts before 1st oct 2014
- advance payment must noe exceed bs entitlement (
full
)
b) trusts on/after 1st oct 2014
- advance payament up to
half
of bs entitlement
5. payment of capital is taken into account when b becomes entitled to trust capital
b receives trust capital minus the advancement of capital already paid
if the b died before attaining condition of trust, their estate would not have to pay back the advancement- hotchpot rules
6. where there is a prior interest B and other B wants advancement of capital:
Consent of the (adult) Prior Interest-Holder:
If there is a prior interest-holder (e.g., a life tenant), written consent from that individual is required for the advancement.
This ensures that the advancement does not negatively impact their entitlement (e.g., trust income).
Where interest ranks equal to other B
B1 in qs interest ranks equal to other B2. Trustees do not require other B2s consent because an advancement to B1 would not prejudice B2s beneficial share as advancement is limited to their beneficial share (half)
TA 1925 used when no express powers of setllor in dec of trust to pay bs income or capital early