Commentary on Sections Part 1 – Trusts Power of advancement
46.Section 24 of the Act implements recommendations 22-25. The basic power to make advances to beneficiaries from trust capital is contained in subsection (1) and is a default power. The effect of this provision is to allow trustees to make advance payment to beneficiaries of all or part of the trust capital to which the beneficiary is entitled, provided this is for the benefit of the beneficiary. This power may be exercised, for example, to release a payment of trust capital to a beneficiary under 18 to pay for education, or to assist a beneficiary in starting up a business. Subsection (2) permits the imposition of conditions that the trustees consider reasonable and, by subsection (3), they may be waived or varied subsequently. The conditions for the making of an advance are found in subsections (4) and (5). In implementation of recommendation 23, subsection (5)(b) provides that the Court of Session may authorise an advance in cases where the court is satisfied that a person whose consent is required is either withholding consent unreasonably or does not have capacity to consent. Authorisation to make an advance may be granted, in accordance with subsection (6), subject to conditions. Subsections (7) and (8) provide that any amount advanced must be brought into account as part of the share of the trust property to which the beneficiary who receives the advance is or will become entitled. Subsection (9) permits the setting up of a new trust, although any such trust must be primarily for the benefit of the beneficiary in question; if it is not, there will be a breach of trust. By subsection (10), it is no objection that a third party gains incidental benefit from the transfer or the setting up of the new trust. Subsection (11) provides certain limitations on the liability of the trustees for any loss that may be sustained in certain circumstances, and subsection (12) provides that the section applies irrespective of when the trust was created, but only in relation to advances made after commencement of section 24.