Dispositive powers: Power of maintenance

Question 1

What is the statutory power of maintenance?

Answer 1

A statutory DEFAULT power allowing the trustees to pay trust income to minor beneficiaries.

As the trustees must usually accumulate the income until the beneficiary reaches the age of 18. The power of maintenance arises when it is for the benefit or education of the minor.

Question 2

When is the statutory power of maintenance available?

Answer 2

Can be used for the benefit of minor beneficiaries with vested or contingent interests in the capital WHEN no other beneficiary has a prior interest in the income.

If not used the income will continue to be accumulated.

Question 3

What do we mean by maintenance, education and benefit?

Answer 3

Common uses might include (non-exhaustive list):

• school fees or other training
• medical bills
• food, clothing and rent
• leisure and holidays

Question 4

What does the exercise of this power entail?

Answer 4

a) The power of maintenance is a fiduciary power.

b) The income must be used for the primary benefit of the minor beneficiary, but it does
not matter that it may indirectly benefit their parent or guardian

b) It is an improper exercise of the power to unquestioningly pay it to the minor’s parent
or guardian, assuming that they will use it for the minor’s benefit.

Question 5

Can the beneficiaries use their previous accumulated income?

Answer 5

Yes, , they are not restricted to using income that is generated by the trust fund after they make the decision to exercise the power of maintenance.

They can also use any income that they have previously accumulated.

PS! Good practice for the beneficiary to consider using this power before turning 18 - if not used, all accumulated income will become part of the capital (not accessible until the B’s capital interest vests).
i.e - until they are 25