Statutory power of advancement: up to the whole presumptive share (Trustee Act 1925 s.32)
Grace Adebayo died in 2021. Her will left £300,000 on trust for such of her three grandchildren, Leo, Mia and Noah, as reach 25, in equal shares. The will gives no one a prior life interest and does not exclude or vary the statutory powers. Leo is 19 and has asked the trustees, Peter Clarke and Hannah Liu, for £100,000 of capital as a deposit on a flat. The trustees think this would be for his benefit. Mia and Noah, both adults, object to the payment.
Which of the following best describes the trustees' power under section 32 of the Trustee Act 1925?
Choose one answer to see the reasoning.
Worked answer
Correct answer D: They may advance up to £100,000, to be brought into account if Leo becomes absolutely entitled.
THE RULE TO REMEMBER
For trusts created or arising after 1 October 2014, trustees may advance up to a beneficiary's whole presumptive share, even if contingent, subject to bringing it into account and any prior interest holder's consent.
Statutory power of advancement: up to the whole presumptive share (Trustee Act 1925 s.32)
Section 32(1) of the Trustee Act 1925 allows trustees, in their absolute discretion, to pay or apply capital for the advancement or benefit of any person entitled to capital, "whether absolutely or contingently on his attaining any specified age". Leo's contingent interest therefore qualifies. Proviso (a), as amended by the Inheritance and Trustees' Powers Act 2014, limits advancements to the whole of the beneficiary's presumptive or vested share. Under s.10(3) and (4) of the 2014 Act, that change applies to trusts created or arising after 1 October 2014, and Grace's will trust arose on her death in 2021. Leo's presumptive share is one third of £300,000, so up to £100,000 may be advanced. Under proviso (b) the advancement must be brought into account as part of his share if he becomes absolutely entitled. Proviso (c) requires consent only from someone with a prior life or other interest, and Mia and Noah have none.
Why A is wrong: The one-half limit applies only to trusts created before 1 October 2014; here the limit is the whole presumptive share.
Why B is wrong: s.32(1) expressly covers beneficiaries entitled contingently on attaining a specified age.
Why C is wrong: Proviso (c) requires consent only from a person with a prior interest, not from co-beneficiaries.
Why E is wrong: Income for maintenance is s.31; s.32 is a power to advance capital.
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