We are dealing with a discretionary trust settled by X. X’s children and grandchildren are potential beneficiaries. Income distributions have been made over a number of years to the grandchildren (who are minors) and are held in the child’s bank account. Tax repayment claims have also been lodged and the cash is again in the child’s bank account.
We have mentioned to the parents (the settlors children) that the monies in the child’s bank account can be used for the benefit of the child eg to pay school fees, trips and wider expenditure provided for the benefit of the child.
The parents have gone on to ask for our view on specifically what types of spending they can reasonably “claim back” from the child’s bank account. Can they reimburse themselves for past expenditure (assuming they had distributions back when the expenditure was incurred.) And what types of expenditure and how wide ranging can be reimbursed (clothing / food / other…); and what records should they keep in relation to any amounts they “pay themselves back”. They want to establish how far back we can claim? Does anyone have any precedents or practical advice on this matter?