A settlement was made on the beneficiary’s children relieving him of the ‘considerable obligation in respect of making provision for their future’ which he would otherwise have owed.
Held: This constituted a benefit for the settlor. The court accepted submissions as to whether a proposed transaction was on behalf of a beneficiary: i) that a power to apply capital for the benefit of somebody is the widest possible formulation of such power;
ii) that under such a power the trustees can deal with capital in any way which, viewed objectively, can fairly be regarded as being to the benefit of the object of the power, and subjectively they believe to be so;
iii) such benefit need not consist of a direct financial advantage to the person who is being benefited. It may be that he is benefited by benefiting a near relation or by relieving him of moral responsibilities.
The phrase ‘viewed objectively meant: ‘the figures are such that it is quite possible to regard this provision for the children, although generous, as being for the benefit of [the beneficiary]. By way of reductio ad absurdum if [the beneficiary] had himself no resources whatever then I do not think it would be possible objectively to regard the making of a provision of half a million pounds or thereabouts for his children as realistically conferring a benefit upon him . . here he is himself . . very well provided for, and that makes all the difference. In every case the question must be one of degree, but there are no such difficulties in this case.’
Citations:
[1977] TR 177
Trusts
Updated: 14 May 2022; Ref: scu.237754
