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PRs Power of maintenance and advancement
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Consolidated notes on personal representatives power of maintenance and advancement
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PRs Power of maintenance and advancementpg. 423
The Statutory Provisions
Where trustees are holding a fund for a minor beneficiary, The Trustees Act 1925 s31 (as
amended by the TA 200 and the Inheritance and Trustee’s Power Act 2014), gives them
power to use income they receive for the minor’s maintenance, education or benefit.
If the trustees continue to hold the trust funds after the beneficiary reaches 18 (e.g. where
the interest is contingent upon reach 21/25), they must pay the income to the beneficiary
from 18 onwards.
Originally s31 allowed the trustees to apply the as much income as was ‘reasonable’, being
an objective test, it was common to vary the statutory provision to allow trustees discretion.
For trusts ‘created or arising’ on or after 1 October, this no longer applies (trusts created by
will – date of death not execution).
s31(1) – trustees have power to pay all or part of the income to minor’s parent/guardian.
s31(2) – directs the trustees to accumulate any income not used for maintenance and invest it.
Summary of s31 of the TA 1925:
Beneficiaries under 18 with vested or contingent interest - cannot insist on receiving an
income as the trustees have a discretion to apply income or accumulate it, i.e. add it to the
capital of the trust.
Beneficiaries reaching 18 who become entailed to capital at that age – entitled to receive
capital and any accumulated income.
Beneficiaries reaching 18 who have right to income but not capital e.g. a life tenant –
entitled to receive the available income each year, plus any income previously accumulated
by them.
Beneficiaries reaching 18 who become entitled to capital at a later age – from 18 have a
right to available income each year. When they reach age where capital is entitled, they will
get the capital plus any income accumulated prior to being 18.
Extending s31:
If expressly stated a clause can remove the right for a contingent beneficiary to receive all
the income from the age 18 and the discretion under s13 of the trustees to pay
maintenance, or to accumulate any surplus will continue to age specified in clause in will.
s32 of the TA 1925
Allows trustees in certain circumstances to permit a beneficiary with an interest in capital to
have capital applied for his benefit before he is entitled to receive it under the basic
provisions of the trust.
As originally drafted s32 only allowed to advance half of the vested/presumptive share –
common to vary in will.
For trusts ‘created or arising’ on or after 1 October, this no longer applies (trusts created by
will – date of death not execution).
Where more than one beneficiary has an interest in a trust fund, any advance made must be
brought into account on final distribution under s32(1)(b).
Advances are brought into account at their cash value at the date of the advance, unless the
trustees make the advance on the basis that it is to be treated as a proportionate part of the
capital under s32(1A).
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