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Trustees' Powers, Maintenance & Advancement And Variation Notes

GDL Law Notes > GDL Equity and Trusts Notes

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A more recent version of these Trustees' Powers, Maintenance & Advancement And Variation notes – written by Cambridge/Bpp/College Of Law students – is available here.

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E&T: Trustees' Powers, Maintenance & Advancement and Variation Introduction

- Powers of trustees:

1. power of sale;

2. power to give receipts;

3. power to insure trust property - s34(1) Trustee Act 2000.

4. power to maintain minors - s31 Trustee Act 1925.

5. power to advance capital - s32 Trustee Act 1925.

6. power to delegate in certain circumstances.

- Source of power: trust document + Trustee Act 1925. Trustee Act 1925: powers implied in trusts. s31: apply income for maintenance + accumulate surplus income during minority. s32: advance capital to beneficiaries. trust instrument: can extent/restrict powers - overrules statutory provisions (often done). s69(2) TA 1925: express provisions/contrary intention prevail over implied powers. e.g. Re Turner's WT [1937]: trust for grandchildren who attain age 28; express power to maintain from age 21 + instruction to accumulate surplus; 1 b. died at 24 ? no vested interest: contrary intention in instrument (to accumulate income) overruled s31(1)(ii).

Maintenance from Income: s31 Trustee Act 1925

- s31: power to apply income for maintenance + accumulated surplus income during minority. minority: 18 (since Family Reform Act 1969; previously 21). 2 possible situations where s31 applies:

1. b. is unmarried minor ('infant').

2. b. has attained majority or earlier married + has contingent interest.

Present income (from current year):

- Beneficiary under 18: s31(1)(i) - ts. can pay/apply income for maintenance, education or benefit. b. has no right to income under 18: even if interest vested. minors cannot give valid receipt: ts. should never pay money directly to b. under 18. tax implications: Stanley v IRC [1944]: infant life tenant, trustee accumulated income until majority, on majority: b. assessed to surtax on accumulated income paid to him ? [Ld Greene]: income 'not his in any real sense' during minority; 'title held in suspense' + destroyed if b. dies before 18 ? 'for all practical purposes in same position as if interest contingent'. exercise: can pay to parent/guardian or otherwise apply income (e.g. pay school fees directly). b. can have any interest: vested or contingent (or vested but liable to divesting). may use whole or part of income: any income not used ? accumulated - s31(2). accumulations: may be used for b's benefit in addition to income in subsequent years of minority - s31(2)(ii). subject to any prior interests/charges: e.g. if b. remainderman, no income until life tenant life tenant dies or surrenders interest. no obligation: ts. must consider 'all the circumstances' (inc. b's age + requirements). should consider exercise: no automatic payments - Wilson v Turner [1883]. in practice: if ts. act in good faith, court unlikely to interfere. may incidentally benefit another: if ts. exercising discretion in best interests of b.

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