Step provisions – What, when and why?

(Provision 5 in version 2) – Powers of Maintenance and Advancement– The Inheritance and Trustee Powers Act 2014 amended the position in law and it is not necessary to have this provision anymore.

4.15 – Appropriation of assets – the previous version referred to assets at the value at the date of death, which has now been altered to the value at the date of appropriation.

4.16 – Charitable receipt clause – this has been widened so that bodies like charitable incorporated organisations are included.

5 – Payment of funds when the beneficiary is a minor or a person without capacity – who can give receipt has now been listed as a standard provision (previously a special provision in the second edition). This is in line with s.3(3) Children Act 1989 as this states that for minors the person with parental responsibility can give a good receipt to the Personal Representative. In the absence of an appointed Attorney or Deputy, the trustees can apply income or capital for the benefit of a beneficiary who lacks mental capacity.

8.4.2 – If a Trustee is named as a beneficiary in the original document and there is an independent Trustee appointed also (who doesn’t have a conflict of interest), the beneficiary Trustee can now benefit from the trust.

10 – Trust Corporations – the wording on charges by a professional Trustee or Trust Corporation has been updated to reflect the wording of their standard terms and conditions from “time to time”. Previously a trust corporation could only charge in accordance with the terms and conditions in place at the date of the Will or trust document.

11 – Apportionment– includes changes from s.1 Trusts (Capital and Income) Act 2013 so that all income is treated as arising when it is paid.

15 – Powers in relation to companies now include the power to start up or promote companies, including entering into any agreements in relation to the winding up or liquidation of a company in which trust property is invested.

16 – Trust income to a beneficiary – where s.31 Trustee Act 1925 applies, the age of entitlement has been increased from 18 to 25. Special consideration will need to be given to whether the residential nil rate band allowance, if appropriate, can be applied to any inheritance tax calculations in these circumstances.

18 – Now defines when a Trustee lacks capacity, such as if a Deputy is appointed to manage their financial affairs or if a medical report is obtained to confirm they can no longer act.