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Power of Trustees - Power of advancement

Q: Does section 32 of power advancement apply to the life tenant?

No, section 32 does not apply to the life tenant as they only have an interest in income and not trust capital . So applies to remaindermen and beneficiaries.

Q: Can the beneficiaries' parents request an advacenment in the case where the beneficiaries are infants? What is the main authority?

In Re Pauling's Settlement Trust the trustees accepted advancement requests from the beneficiary's father. The money was used to pay the parents' debts. It was held that these advancements were improper .

6 important questions on Power of Trustees - Power of advancement

What does a power if advancement allow the trustees to do to the trust?

Allows beneficiaries to take trust capital earlier than they are strictly entitled.

Summarise power of advancement under section 32(1) of the Trustee Act 1925 and when trustees can pay capital money to the beneficiaries?

The trustees can pay any capital money for the advancement or benefit of the beneficiaries under their absolute discretion to those entitled to the capital whether absolutely or contingently.

What are the three elements necessary for the power of advancement under section 23(1)(a-c) of the Trustee Act 1925?

(a) Capital must not exceed one-half of the shares
(b) The money paid for the advancement will be brought into account as part of the beneficiaries shares
(c) Must not prejudice any person entitled to any prior life or other interest unless the person is in existence and of full age and consents in writing to the advancement.

Does section 32 of power advancement apply to the life tenant?

No, section 32 does not apply to the life tenant as they only have an interest in income and not trust capital. So applies to remaindermen and beneficiaries.

What are the three main restrictions under section 32 of the Trustee Act 1925?

The maximum that can be advanced is one-half of the beneficiary's entitlement unless the trust was created or arose after the Inheritance and Trustee's Powers Act 2014 (section 9) which allows trustees to advance the full amount of the beneficiary's share.
The beneficiary must bring any advancement into account when becoming entitled
Anyone with prior interest (also includes someone with a prior life interest - e.g. A trust held for Arabella for life) must be an adult and consent in writing the advancement.

Can the beneficiaries' parents request an advacenment in the case where the beneficiaries are infants? What is the main authority?

In Re Pauling's Settlement Trust the trustees accepted advancement requests from the beneficiary's father. The money was used to pay the parents' debts. It was held that these advancements were improper.

The question on the page originate from the summary of the following study material:

WS5. Running Trust

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