Benefiting Non-objects With Powers Of Appointment: Squaring The Circle?

• Published date: 18 May 2021
• Subject Matter: Corporate/Commercial Law, Family and Matrimonial, Trusts, Wills/ Intestacy/ Estate Planning
• Law Firm: Wilberforce Chambers
• Author: Ms Emily Campbell

Private client practitioners will be familiar with the principle that powers of advancement can be used to create new powers (notwithstanding the rule against delegation) and to benefit non-objects (notwithstanding the rules on excess of power) if it is for the benefit of an object to do so. Powers of advancement are generally thought of as being the statutory power of advancement (as usually extended to the whole share rather than the half) and other powers of trustees "to apply" capital which are expressed to be exercised for the benefit of an object.

The principle that a power of advancement may be used to benefit a non-object if it is for the benefit of an object is often referred to as the "Re Clore" principle¹. Practitioners were reminded of the need to adopt an approach to the principle which was not overly liberal in the judgment of Hart J in the later case of X v A². A similar approach to the word "benefit" has been taken in the context of applications under the Variation of Trusts Act 1958³.

These days, powers of appointment in many trusts (even older ones) contain an express power to delegate by the creation of new powers, which has reduced the need for debate on delegation. But what of the possibility of benefiting non-objects? Can they be used in a similar way to powers of advancement where they are expressed to be exercisable "for the benefit of" an object? Or is there some magic in the verb "to apply" rather than "to appoint". There is a surprising dearth of authority on this⁴.

In my 2002 book, "Changing the Terms of Trusts"⁵, I commented that I was not in favour of drawing a distinction between powers of appointment and powers of advancement but commented that the practitioner should exercise caution owing to the absence of any positive authority saying that it was permissible to use a power of appointment to benefit non-objects. Lewin on Trusts⁶ states (in fairly uncompromising terms) that "A power to appoint in favour of one or both of A and B is plainly not well exercised by an appointment in favour of C or of A, B and C . Unless the appointment is in substance to an object and is made with the consent of that object". There is a useful discussion in Thomas on Powers⁷, which (after identifying the lack of clear authority on the position) concludes: ".while acknowledging the differences between the two kinds of power . there may be little logic or sense in distinguishing between them on the basis of a narrow point of construction".

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