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Clause 121—(Power Of Advancement)

Volume 155: debated on Wednesday 14 June 1922

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  • (1) Where under a trust a person is entitled to the capital of the trust property or of any share thereof, whether absolutely or contingently on his attaining any specified age or on the occurrence of any other event, or subject to a gift over on his death under any specified age or on the occurrence of ally other event, and whether in possession or in remainder or reversion, the trustees may from time to time pay or apply any capital money subject to the trust, not exceeding altogether in amount one-half of the value of such property or share, for the advancement or benefit of such person in such manner as the trustees shall in their absolute discretion think fit:
  • Provided that

  • (a) If such person is or becomes absolutely and indefeasibly entitled to a share in the trust property the money so paid or applied shall be brought into account as part of such share; and
  • (b) No such payment or application shall be made so as to prejudice any person entitled to any prior life or other interest, whether vested or contingent, in the money paid or applied without the consent in writing of such person.
  • (2) This Section applies only where the trust property consists of money or securities or property held upon trust for sale calling in and conversion, and such money or securities, or the proceeds of such sale calling in and conversion are not by Statute or in equity considered its land, or applicable as capital money for the purposes of the Settled Land Acts.
  • (3) This Section applies only if and as far as a. contrary intention is not expressed in the instrument (if any) creating the trust, and shall have effect subject to the terms of that instrument and to the provisions therein contained.
  • (4) This Section applies only to trusts constituted or created after the commencement of this Act.
  • I beg to move to leave out the Clause.

    As it is drawn, it is a very drastic proposal. Supposing I leave a sum of money to someone upon attaining a certain age and conditional and contingent upon attaining that age; or supposing I leave a sum of money to a woman conditional upon her marriage. Although this money is left conditionally, by this Clause the trustee may divest the person who would ultimately benefit of half the property. Let us consider how it works out. Supposing I leave £1,000 to A.B. upon his attaining the age of 25 and I further provide that if he does not attain the age of 25 it goes to C.D. Notwithstanding the fact that I have definitely laid down that he should only receive this money on attaining the ago of 25, this Clause says that the trustee may give A.B. half the legacy before he attains that age. Therefore, it gives the trustee the right to take away from C.D. half of the money and hand it to A.B. I can quite understand a Clause of this kind being put into a settlement. A man may leave money to his children on attaining the age of 25, and it may be necessary to give power to his trustees to use part of the money in order to advance their prospects. It is, however, quite improper that such a power should be given in a Clause of this kind in an Act of Parliament. Supposing a man deliberately omits putting a Clause into the settlement which will permit advancement; yet the Bill permits such advancement unless it is expressly in terms excluded. I venture to think it would be much better to leave the law as it stands at present so that when a testator says that A.B. is only to receive £1,000 when he attains the age of 21 or marries, that shall operate, while if he desires to give power of advancement he is perfectly free to do that, and in that case his wish will he carried out. On the other hand, if this Clause is retained, his wish may be rendered entirely nugatory.

    This is a very valuable Clause, and it is one that experience has proved to be most necessary. I cannot help feeling a little disinclined to again quote the conveyancer of Lincoln's Inn, whose experience in this matter is so invaluable, because it necessarily involves the inference that the hon. and learned Member who has moved the Amendment is not familiar with the existing practice. We in this House all appreciate the immense amount of time and trouble the hon. Member has given to his public duties, but the truth of the matter is that those public duties have taken him away from the daily practice of conveyancing for a great number of years, and I hope he will not think I am reflecting on his once great knowledge of conveyancing when I say it is there no longer. The present-day practice shows what present-day experience wants. May I just read a few sentences from a couple of letters in reference to this Clause Mr. Underhill, a learned conveyancer, writes:

    "Clause 121 ought, I think, to stand. No one with experience would deny that for many years before 1881 it was always usual in well-drafted settlements and wills to provide (1) for the maintenance of infants even where only contingently entitled on attaining 21, and (2) for the) advancement to infants out of vested or contingent capital. In 1881 Parliament, in the 42nd and 43rd Sections of the Conveyancing Act, provided for the maintenance of infants but left the question of advancement to he dealt with by the settlors and testators expressly. In my opinion the time has now come for giving statutory force to a provision which we find in every well-drafted settlement or will."
    That has become the ordinary practice. As regards the comment of the Mover of the Amendment that it is inconvenient that capital which is only left contingently should be used for the advancement of persons contingently interested, I venture to think the hon. and learned Member has omitted to take into consideration a fact which we all know to be the case. The property is left contingently on attaining the age of 21 years or marrying because the settlor wants to avoid the risk of the death duties being paid in the event of the person dying unmarried before the age of 21. It is really consistent with the intentions of the settlor that the advance should be made. The proof of that is that in settlements and wills now made the power of advancement is habitually given. Then Mr. Edward Beaumont, who was President of the Institute of Conveyancers when this particular Bill was considered, has written as follows in regard to this Clause:
    "My answer to the proposal to leave it out is that some such Clause is inserted in almost every settlement or will. I should think it is not omitted in more than one case in twenty. If I were instructed to put all 'usual and proper Clauses,' I should as a matter of course, insert this Clause, and so I take it would all conveyancers. The causes for which advancements may be required are endless. It may be a matter of the utmost importance to be able to advance money for some urgent need, and if you have no ad- vancement Clause it would be necessary to go to the Court and have some scheme for charging the child's contingent interest and insuring the child's life, and to waste money simply for want of a 'common form' provision. Advancement is generally wanted when a child is starting in life, and that is not much under 21, and it would be a very rare thing for the child who is advanced not to become ultimately entitled to the settled fund. Even in the rare case of his dying, before becoming absolutely entitled to the whole fund, the money advanced will have been well spent for the benefit of one of the objects of the settlement."
    These are the facts of the case. The Clause can be negatived or excluded by any settlor if he chooses, and it does not apply to any trust constituted or created before the commencement of the Act. Under these circumstances, I ask the House to reject the Amendment.

    The Solicitor-General may have done me unwittingly a benefit by suggesting I am or was an eminent conveyancer. I think he is mistaken. But this is not merely a question of conveyancing. It is a question of common sense. If a man leaves money contingently at the age of 21, and wishes to empower the trustee to advance half the money before that age is attained, he can provide that that be done. But if he does not put such a provision into the settlement, why should the money which belongs to one person be given to another person? It really passes my understanding that such a thing should be proposed. If a man says that A.B. shall receive a certain sum only when he attains the age of 21, and that if he does riot attain that age, C.D. shall get it, why should an Act of Parliament override such a provision?

    The object of this Bill very largely is to save costs. This Clause is a Clause which it to be found in every well drawn will and settlement, and if it is not there, the beneficiaries under that will or settlement are at a very great disadvantage. If this Clause is retained, it will lessen costs and it will also supply a defect from which many beneficiaries may suffer. If a testator leaves a sum of money to a child, who is to receive it on attaining the age of 21 or 25, that child is primarily intended to be benefited, although it is not to have complete control of the money until the age definitely fixed is reached. Power is generally given to the trustee to apply a part of the money not exceeding one-half for the benefit of the child, and that is all that this Clause does.

    Amendment negatived.