Pilkington v IRC
Trustees can exercise their power of advancement by transferring money to a new settlement for the beneficiary, as long as it is for the beneficiary's benefit.
Facts
Under a will trust, a young girl, Penelope Pilkington, had a contingent interest in a share of a trust fund. Her parents wanted the trustees to exercise their statutory power of advancement under section 32 of the Trustee Act 1925, by transferring part of her share to a new settlement for her benefit, which would save estate duty. The Inland Revenue argued that this was not a proper use of the power.
Legal principle
The House of Lords held that the power of advancement could be used in this way. Viscount Radcliffe said that the power of advancement can be used for any use of the money that will improve the material situation of the beneficiary, and that the benefit need not be one that the beneficiary receives personally and immediately. Saving estate duty was a benefit, and the fact that others would also benefit under the new settlement did not prevent its use. However, the proposed settlement would have breached the rule against perpetuities in part.
Related cases on trustees: duties, powers and variation of trusts
- Bartlett v Barclays Bank Trust Co Ltd (No 1) [1980] Ch 515
- Butler-Sloss v Charity Commission for England and Wales [2022] EWHC 974 (Ch), [2022] Ch 371
- Chapman v Chapman [1954] AC 429
- Cowan v Scargill [1985] Ch 270
- Goulding v James [1997] 2 All ER 239
- Harries v Church Commissioners for England [1992] 1 WLR 1241
- Learoyd v Whiteley (1887) 12 App Cas 727
- Re Lucking's Will Trusts [1968] 1 WLR 866
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This summary is for study and revision and is not legal advice. Although our case summaries are checked for accuracy, we do not guarantee that they are free from errors or omissions. Always read the full judgment for the court's reasoning.
