- Published on
SQE – Equity and Trust – The Power of Maintenance
Introduction
The power of maintenance is an important statutory power that enables trustees to use trust income for the benefit of beneficiaries before they become fully entitled to receive it. The power is particularly relevant where the beneficiary is a child and requires financial support for living expenses, education, healthcare, or general welfare.
The purpose of the power is to ensure that trust property can be used to support beneficiaries during their minority rather than requiring them to wait until they become absolutely entitled to the trust fund. In modern trust administration, the power provides trustees with flexibility to respond to the changing needs of young beneficiaries while preserving the long-term purpose of the trust.
The power is governed by section 31 of the Trustee Act 1925, as amended by the Inheritance and Trustees’ Powers Act 2014.
⸻
Nature of the Power
The power of maintenance is a discretionary power rather than a legal entitlement.
This means that trustees are permitted, but not obliged, to apply trust income for the benefit of an infant beneficiary.
The trustees must consider the circumstances of the beneficiary and determine whether maintenance payments are appropriate. Beneficiaries cannot compel trustees to exercise the power while they remain minors unless the trust instrument provides otherwise.
The discretion allows trustees to balance the immediate needs of beneficiaries against the long-term preservation of trust assets.
⸻
Statutory Basis
Section 31 of the Trustee Act 1925 authorises trustees to apply trust income for the maintenance, education, or benefit of a beneficiary who has not yet become absolutely entitled.
The power operates automatically unless expressly excluded or modified by the trust instrument.
The provision reflects Parliament’s recognition that young beneficiaries often require financial support before they become entitled to receive trust capital.
⸻
Use of Trust Income
The maintenance power applies only to income generated by the trust fund.
Examples of trust income include:
Trustees may use this income to support eligible beneficiaries while preserving the capital of the trust.
The distinction between income and capital is important because the power of maintenance concerns income, whereas the power of advancement concerns capital.
⸻
Maintenance, Education and Benefit
Section 31 permits trustees to apply income for the maintenance, education, or benefit of the beneficiary.
The courts have interpreted these terms broadly.
Maintenance extends beyond basic necessities such as food, clothing, and shelter. It may include expenditure that improves the beneficiary’s welfare and overall standard of living.
Education includes school fees, university tuition, books, accommodation, training courses, and professional qualifications.
Benefit is interpreted most widely and may encompass almost any expenditure that improves the beneficiary’s personal, educational, social, or financial circumstances.
This flexible interpretation enables trustees to respond to the individual needs of beneficiaries.
⸻
Examples of Permitted Maintenance Payments
Trustees may properly use the maintenance power to pay for:
The key consideration is whether the expenditure benefits the beneficiary.
⸻
Who Receives the Payment?
Maintenance payments are not always paid directly to the beneficiary.
In practice, trustees commonly make payments to:
Trustees should maintain accurate records and obtain receipts wherever possible.
Proper documentation protects trustees if their decisions are later questioned.
⸻
Age Requirement
Under section 31, the power generally applies while the beneficiary is under the age of 18.
During this period, the trustees retain discretion over whether income should be distributed and how much should be paid.
However, the trust instrument may alter this age limit by expressly extending or restricting the operation of the power.
The terms of the trust deed therefore remain highly significant.
⸻
Position at Age 18
Once the beneficiary reaches the age of 18, the position changes substantially.
At that point, the beneficiary becomes entitled to the income arising from their share of the trust fund.
The trustees’ discretion under the maintenance power ceases in relation to that income.
The beneficiary can therefore demand payment of income generated by their share of the trust property.
This reflects the general principle that adults are entitled to control their own financial affairs.
⸻
The Original Requirement of Reasonableness
Before the reforms introduced by the Inheritance and Trustees’ Powers Act 2014, section 31 required trustees to distribute only such amounts as were reasonable in the circumstances.
This limitation meant that trustee decisions could potentially be challenged by beneficiaries on the basis that payments were excessive or insufficient.
The reasonableness requirement therefore imposed a significant restriction upon trustee discretion.
⸻
Trustee Responses to the Reasonableness Requirement
Because of concerns about potential challenges, it became common drafting practice to modify section 31 within trust instruments.
Trust deeds frequently removed the requirement of reasonableness and instead granted trustees broader discretion regarding:
This drafting practice was so widespread that Parliament ultimately reformed the statutory provision itself.
⸻
Reform Under the Inheritance and Trustees’ Powers Act 2014
The Inheritance and Trustees’ Powers Act 2014 significantly amended section 31.
For trusts created or interests arising on or after 1 October 2014, trustees now enjoy an unfettered discretion regarding the exercise of the maintenance power.
The statutory requirement of reasonableness was removed.
Consequently, trustees have greater flexibility when deciding whether to distribute income and in determining the amount to be paid.
The reform reflects the reality that most professionally drafted trust instruments had already removed the reasonableness restriction.
⸻
Older Trusts
The reforms introduced in 2014 do not apply retrospectively.
Trusts created before 1 October 2014 remain subject to the original statutory provisions unless the trust instrument expressly modifies them.
Consequently, practitioners must always determine:
Failure to do so may result in the incorrect application of the maintenance power.
⸻
Accumulation of Undistributed Income
Where trustees choose not to distribute income under the maintenance power, the income must generally be accumulated within the trust.
Accumulated income becomes part of the trust fund and is preserved for future distribution.
Once the beneficiary becomes entitled to the trust capital, the accumulated income is ordinarily paid to them together with their share of the trust property.
This ensures that beneficiaries do not permanently lose the benefit of undistributed income.
⸻
Relationship with the Power of Advancement
The power of maintenance should be distinguished from the power of advancement.
The maintenance power concerns the use of trust income.
The advancement power concerns the use of trust capital.
Both powers are designed to benefit beneficiaries before they become fully entitled, but they operate in different ways and are governed by separate statutory provisions.
Trustees often consider both powers together when deciding how best to assist beneficiaries.
⸻
Case Study
Facts
A trust fund worth £2 million is held for Olivia, who will become entitled to the capital at age 25.
The trust generates annual income of £40,000.
Olivia is currently 16 years old and attends a private school. Her parents request assistance with tuition fees and educational expenses.
The trustees decide to apply £25,000 of trust income towards her school fees and retain the remaining income within the trust.
Analysis
The payment falls squarely within section 31 because it is applied for Olivia’s education and benefit.
The trustees are entitled to use trust income for this purpose while Olivia remains under 18.
The undistributed income may be accumulated within the trust for future benefit.
Outcome
The maintenance payment is valid and represents a proper exercise of the trustees’ discretion.
The accumulated income will remain within the trust and may ultimately be distributed when Olivia becomes entitled to the trust capital.
⸻
Practical Importance
The maintenance power is one of the most frequently exercised trustee powers in family trusts.
It enables trustees to:
The flexibility introduced by the 2014 reforms has further enhanced the usefulness of the power in modern trust administration.
⸻
Conclusion
The power of maintenance under section 31 of the Trustee Act 1925 enables trustees to use trust income for the maintenance, education, and benefit of infant beneficiaries. The courts have interpreted these concepts broadly, allowing trustees considerable flexibility in supporting beneficiaries during their minority. Historically, trustee discretion was constrained by a statutory requirement of reasonableness, but the Inheritance and Trustees’ Powers Act 2014 removed this restriction for newer trusts and granted trustees a largely unfettered discretion. Where income is not distributed, it must generally be accumulated for future benefit. Together with the power of advancement, the maintenance power forms an essential part of modern trust administration by allowing trustees to balance the immediate needs of beneficiaries with the long-term preservation of trust assets.
⸻
References
Trustee Act 1925, s 31.
Inheritance and Trustees’ Powers Act 2014.
Re Pauling’s Settlement Trusts (No 1) [1964] Ch 303.
Speight v Gaunt (1883) 9 App Cas 1.
Alastair Hudson, Equity and Trusts (11th edn, Routledge 2022).
James Penner, The Law of Trusts (12th edn, Oxford University Press 2020).
Graham Virgo, The Principles of Equity and Trusts (5th edn, Oxford University Press 2024).
John McGhee (ed), Snell’s Equity (35th edn, Sweet & Maxwell 2024).
Introduction
The power of maintenance is an important statutory power that enables trustees to use trust income for the benefit of beneficiaries before they become fully entitled to receive it. The power is particularly relevant where the beneficiary is a child and requires financial support for living expenses, education, healthcare, or general welfare.
The purpose of the power is to ensure that trust property can be used to support beneficiaries during their minority rather than requiring them to wait until they become absolutely entitled to the trust fund. In modern trust administration, the power provides trustees with flexibility to respond to the changing needs of young beneficiaries while preserving the long-term purpose of the trust.
The power is governed by section 31 of the Trustee Act 1925, as amended by the Inheritance and Trustees’ Powers Act 2014.
⸻
Nature of the Power
The power of maintenance is a discretionary power rather than a legal entitlement.
This means that trustees are permitted, but not obliged, to apply trust income for the benefit of an infant beneficiary.
The trustees must consider the circumstances of the beneficiary and determine whether maintenance payments are appropriate. Beneficiaries cannot compel trustees to exercise the power while they remain minors unless the trust instrument provides otherwise.
The discretion allows trustees to balance the immediate needs of beneficiaries against the long-term preservation of trust assets.
⸻
Statutory Basis
Section 31 of the Trustee Act 1925 authorises trustees to apply trust income for the maintenance, education, or benefit of a beneficiary who has not yet become absolutely entitled.
The power operates automatically unless expressly excluded or modified by the trust instrument.
The provision reflects Parliament’s recognition that young beneficiaries often require financial support before they become entitled to receive trust capital.
⸻
Use of Trust Income
The maintenance power applies only to income generated by the trust fund.
Examples of trust income include:
- interest earned on investments;
- rental income from trust property;
- dividends from shares;
- distributions from investment funds.
Trustees may use this income to support eligible beneficiaries while preserving the capital of the trust.
The distinction between income and capital is important because the power of maintenance concerns income, whereas the power of advancement concerns capital.
⸻
Maintenance, Education and Benefit
Section 31 permits trustees to apply income for the maintenance, education, or benefit of the beneficiary.
The courts have interpreted these terms broadly.
Maintenance extends beyond basic necessities such as food, clothing, and shelter. It may include expenditure that improves the beneficiary’s welfare and overall standard of living.
Education includes school fees, university tuition, books, accommodation, training courses, and professional qualifications.
Benefit is interpreted most widely and may encompass almost any expenditure that improves the beneficiary’s personal, educational, social, or financial circumstances.
This flexible interpretation enables trustees to respond to the individual needs of beneficiaries.
⸻
Examples of Permitted Maintenance Payments
Trustees may properly use the maintenance power to pay for:
- school fees;
- university tuition;
- textbooks and educational materials;
- medical treatment;
- accommodation costs;
- living expenses;
- extracurricular activities;
- professional training.
The key consideration is whether the expenditure benefits the beneficiary.
⸻
Who Receives the Payment?
Maintenance payments are not always paid directly to the beneficiary.
In practice, trustees commonly make payments to:
- parents;
- guardians;
- schools;
- universities;
- healthcare providers;
- other third parties providing services to the beneficiary.
Trustees should maintain accurate records and obtain receipts wherever possible.
Proper documentation protects trustees if their decisions are later questioned.
⸻
Age Requirement
Under section 31, the power generally applies while the beneficiary is under the age of 18.
During this period, the trustees retain discretion over whether income should be distributed and how much should be paid.
However, the trust instrument may alter this age limit by expressly extending or restricting the operation of the power.
The terms of the trust deed therefore remain highly significant.
⸻
Position at Age 18
Once the beneficiary reaches the age of 18, the position changes substantially.
At that point, the beneficiary becomes entitled to the income arising from their share of the trust fund.
The trustees’ discretion under the maintenance power ceases in relation to that income.
The beneficiary can therefore demand payment of income generated by their share of the trust property.
This reflects the general principle that adults are entitled to control their own financial affairs.
⸻
The Original Requirement of Reasonableness
Before the reforms introduced by the Inheritance and Trustees’ Powers Act 2014, section 31 required trustees to distribute only such amounts as were reasonable in the circumstances.
This limitation meant that trustee decisions could potentially be challenged by beneficiaries on the basis that payments were excessive or insufficient.
The reasonableness requirement therefore imposed a significant restriction upon trustee discretion.
⸻
Trustee Responses to the Reasonableness Requirement
Because of concerns about potential challenges, it became common drafting practice to modify section 31 within trust instruments.
Trust deeds frequently removed the requirement of reasonableness and instead granted trustees broader discretion regarding:
- whether to make maintenance payments;
- the amount to be paid;
- the manner in which payments should be made.
This drafting practice was so widespread that Parliament ultimately reformed the statutory provision itself.
⸻
Reform Under the Inheritance and Trustees’ Powers Act 2014
The Inheritance and Trustees’ Powers Act 2014 significantly amended section 31.
For trusts created or interests arising on or after 1 October 2014, trustees now enjoy an unfettered discretion regarding the exercise of the maintenance power.
The statutory requirement of reasonableness was removed.
Consequently, trustees have greater flexibility when deciding whether to distribute income and in determining the amount to be paid.
The reform reflects the reality that most professionally drafted trust instruments had already removed the reasonableness restriction.
⸻
Older Trusts
The reforms introduced in 2014 do not apply retrospectively.
Trusts created before 1 October 2014 remain subject to the original statutory provisions unless the trust instrument expressly modifies them.
Consequently, practitioners must always determine:
- when the trust was created;
- whether any amendments have been made;
- whether the trust deed modifies section 31.
Failure to do so may result in the incorrect application of the maintenance power.
⸻
Accumulation of Undistributed Income
Where trustees choose not to distribute income under the maintenance power, the income must generally be accumulated within the trust.
Accumulated income becomes part of the trust fund and is preserved for future distribution.
Once the beneficiary becomes entitled to the trust capital, the accumulated income is ordinarily paid to them together with their share of the trust property.
This ensures that beneficiaries do not permanently lose the benefit of undistributed income.
⸻
Relationship with the Power of Advancement
The power of maintenance should be distinguished from the power of advancement.
The maintenance power concerns the use of trust income.
The advancement power concerns the use of trust capital.
Both powers are designed to benefit beneficiaries before they become fully entitled, but they operate in different ways and are governed by separate statutory provisions.
Trustees often consider both powers together when deciding how best to assist beneficiaries.
⸻
Case Study
Facts
A trust fund worth £2 million is held for Olivia, who will become entitled to the capital at age 25.
The trust generates annual income of £40,000.
Olivia is currently 16 years old and attends a private school. Her parents request assistance with tuition fees and educational expenses.
The trustees decide to apply £25,000 of trust income towards her school fees and retain the remaining income within the trust.
Analysis
The payment falls squarely within section 31 because it is applied for Olivia’s education and benefit.
The trustees are entitled to use trust income for this purpose while Olivia remains under 18.
The undistributed income may be accumulated within the trust for future benefit.
Outcome
The maintenance payment is valid and represents a proper exercise of the trustees’ discretion.
The accumulated income will remain within the trust and may ultimately be distributed when Olivia becomes entitled to the trust capital.
⸻
Practical Importance
The maintenance power is one of the most frequently exercised trustee powers in family trusts.
It enables trustees to:
- fund education;
- support children financially;
- meet unexpected expenses;
- improve beneficiaries’ welfare;
- preserve trust capital for future distribution.
The flexibility introduced by the 2014 reforms has further enhanced the usefulness of the power in modern trust administration.
⸻
Conclusion
The power of maintenance under section 31 of the Trustee Act 1925 enables trustees to use trust income for the maintenance, education, and benefit of infant beneficiaries. The courts have interpreted these concepts broadly, allowing trustees considerable flexibility in supporting beneficiaries during their minority. Historically, trustee discretion was constrained by a statutory requirement of reasonableness, but the Inheritance and Trustees’ Powers Act 2014 removed this restriction for newer trusts and granted trustees a largely unfettered discretion. Where income is not distributed, it must generally be accumulated for future benefit. Together with the power of advancement, the maintenance power forms an essential part of modern trust administration by allowing trustees to balance the immediate needs of beneficiaries with the long-term preservation of trust assets.
⸻
References
Trustee Act 1925, s 31.
Inheritance and Trustees’ Powers Act 2014.
Re Pauling’s Settlement Trusts (No 1) [1964] Ch 303.
Speight v Gaunt (1883) 9 App Cas 1.
Alastair Hudson, Equity and Trusts (11th edn, Routledge 2022).
James Penner, The Law of Trusts (12th edn, Oxford University Press 2020).
Graham Virgo, The Principles of Equity and Trusts (5th edn, Oxford University Press 2024).
John McGhee (ed), Snell’s Equity (35th edn, Sweet & Maxwell 2024).
0 Comments