Power of Maintenance

The trustees have a discretion as to whether to maintain the beneficiary.

Payments by way of maintenance are payments out of income to provide for routine
necessities such as education, clothing, food and lodging. A power to maintain is not implied
into the trust instrument. It must be expressly given or the trustee can rely on the provision
in Section 36 of Trustee Act 1949. An infant cant give a valid receipt for the income. A valid
receipt may be given to the trustees by the parent of the infants. If the infant is married, he
may give a valid receipt himself.
Section 36(2)
The income arising out of the trust fund should be accumulated and invested in authorised
investment. Any surplus income after the making of payment is accumulated, the trustees
may use these accumulations at any time during the infancy as if there were income arising
in the current year, thereby making the income available for maintenance purposes.
Section 36(1)
Trustees have discretionary power to maintain an infant beneficiary out of his share of the
income. It is applicable if there is any other fund applicable for the maintenance or if any
person is bound by law for the maintenance or education.
This discretionary power must be exercised subject to the proviso under the same section
that;
a) The beneficiaries must be an infant
b) The infant must have a beneficial interest.
c) The income arising out of the infants share is applicable to the maintenance, until the
infant attains his interest under the trust, must be held for his benefit.
Trustees also must have regard to, while exercising their discretion, the following matters
set out in the proviso under the same section;
a) The age of the infant
b) His requirements
c) The general circumstances of the case
d) Other income available for maintenance.
Trustees should not normally give the infant money in excess of his needs if he has other
financial resources.
The power to maintain can only arise where the beneficiary is entitled to receive
intermediate income under the trust. This will be the case either where his interest is vested
or where it is a contingent interest which carries the intermediate income. For example:
If the infants share does not carry income, then there can be no maintenance. This involves
a situation where a trust instrument states RM10,000 to A when he attains 23 years old, the
income to B until then. This gift does not carry interest income to A, therefore no
maintenance can be given to A.
Under Section 36(1) the money may be paid to the parent or guardian of the infant or
directly for his benefit. If the infant is married, they may pay it directly to him.
The power to maintain ceases when the beneficiary reaches the age of majority. Even if his
interest is still contingent, the trustees must pay the whole of the income to him until he
obtains a vested interest or dies.
Section 57
The court has inherent jurisdiction to approve the use of income or even capital for the
maintenance of infant beneficiaries.
Cases
1. Wilson v Turner
[Refer case worksheet]
2. Bryant v Hickely
If the discretion is exercised in good faith the court will not interfere.
3. Re Greenwood
Although Section 19 protects trustees if they acted in good faith, it was held that this
protection is only given if the trustees had actively exercised their discretion.