Definition of Trust Fund

Trusts Discussion
1

Probably a very simple question with hopefully a very simple answer!

A will leaves " the residue of my estate, including (a specific property)…and my estate and the investments which currently represent it are referred to in this will as ‘the Trust Fund’.

My trustees shall hold the trust fund absolutely for those beneficiaries who reach the age of 21"

The will is silent on S31 and there is a specific power “to apply for the benefit of any beneficiary as my trustees think fit all or part of the capital to which that beneficiary is entitled…”

As the will is silent as to S31, my initial reaction is that the trust fund includes income and capital so that no IIP exists over income at age 18 and the whole trust fund, being both income and capital, is discretionary until age 21.

But I am reading conflicting information which may suggest that the trust fund does not include income i.e. there is no stipulated age for income so that the beneficiaries will attain an IIP at 18 with the capital being discretionary until 21.

Can anyone confirm if the trust fund is treated as : -
a) purely discretionary as to income and capital until age 21 or
b) IIP at 18 over income and discretionary over capital until 21?

Joanne Davies
Simpson Wreford & Co

2

The trust under the will only concerns capital and so s.31 will apply to govern the income with the result that the beneficiaries will receive an IIP in their share from 18. Prior to that, the income of their share can be distributed to them or for their benefit under s.31(1)(i) or otherwise accumulated. Nb this is not wholly discretionary as income from a share can only be distributed to the contingent beneficiary of that share and is otherwise accumulated to their share.

The discretionary power to advance capital will apply throughout.

Andrew Goodman
Osborne Clarke LLP