Q&As

Do trustees have the power to pay income to the parent of an adult (under 25 years of age) beneficiary of an old accumulation and maintenance trust?

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Produced in partnership with Lynne Counsell of 9 Stone Buildings
Published on LexisPSL on 02/11/2020

The following Private Client Q&A produced in partnership with Lynne Counsell of 9 Stone Buildings provides comprehensive and up to date legal information covering:

  • Do trustees have the power to pay income to the parent of an adult (under 25 years of age) beneficiary of an old accumulation and maintenance trust?
  • Accumulation and maintenance (A&M) trusts
  • Section 31 of the Trustee Act 1925
  • Payment to parent or beneficiary
  • Summary

Do trustees have the power to pay income to the parent of an adult (under 25 years of age) beneficiary of an old accumulation and maintenance trust?

Accumulation and maintenance (A&M) trusts

A&M trusts are a specific type of trust which makes provision for children and young adults up to the age of 25, (see Practice Note: Accumulation and maintenance trusts—IHT). The aim of such trusts is to allow those beneficiaries to benefit from income in the period prior to them receiving capital.

Such trusts can be divided into two categories:

  1. an old-fashioned A&M trust, whereby trustees are given a discretion whether to distribute income for the benefit of the beneficiary or accumulate it until the beneficiary attains the age of 25

  2. an A&M trust which satisfied the conditions in section 71 of the Inheritance Tax Act 1984 (IHTA 1984) which granted relief from inheritance tax (see: IHTM42807). Schedule 20 to the Finance Act 2006 amended IHTA 1984, s 71 so that the beneficiary of a qualifying trust must become beneficially entitled to the property at a specified age not exceeding 18 (rather than 25). If existing A&M trusts were not modified before 6 April 2008 (if the trustees have power) the trust generally became a relevant

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