Trustee Powers: Maintenance and Advancement Flashcards
What is income?
A return paid on a regular basis generated from capital.
What are common examples of income returns?
Dividends paid on shares
Interest paid on bank accounts
Rent paid for the occupation of land
What power do trustees have to advance income to a beneficiary under the age of 18 years?
Trustees may use income to pay for the maintenance, education and benefit of a beneficiary under the age of 18 years provided that there is no contrary provision in the declaration of trust and there is no life tenant.
If the trustees wish to apply income for a minor beneficiary’s maintenance, education
or benefit, who should the monies be paid to?
The beneficiaries should pay the income directly to the beneficiary’s parent or guardian, or directly to the maintenance, education or benefit provider.
Can trustees be compelled to exercise their power to apply income for a minor beneficiary’s maintenance, education
or benefit?
No, it is entirely discretionary.
How are adult contingent beneficiaries entitled to trust income?
They are entitled as it arises and the trustees MUST pay that income to them until the vesting of their beneficial interests.
What happens if an adult contingent beneficiary dies before the condition is satisfied?
Their estate will receive nothing – no capital and no accumulated income.
What does capital refer to?
The underlying trust property itself.
What power do trustees have to apply trust capital early for minor beneficiaries?
Trustees have the power to pay or apply trust capital early for a minor beneficiary’s advancement or benefit where:
There is no contrary provision in the declaration of trust;
the beneficiary has an interest in capital;
The advance payment does not exceed the beneficiary’s entitlement;
The payment is taken into account when the beneficiary becomes entitled to trust capital; and
If there is a life tenant who is an adult, he/she has given written consent to the advancement.
