Minors or incapacitated persons are under a legal disability
from holding property personally and property has to be held on
trust for them. In a trust where such a beneficiary has an
indefeasibly vested interest in the trust income and capital the
trust is a bare trust. It does not matter that because of the
beneficiary’s incapacity the trustee has active duties to
perform. The income is the beneficiary’s as it arises.
For most UK trusts for minors the provisions of Section 31
Trustee Act 1925 apply during minority. This Act does not apply to
trusts administered in Scotland or established under Scots law.
Where S31 applies, the Trustees will have discretion over the use
of income for the benefit of the minor and must accumulate the
balance. Where the beneficiary’s title to income is
indefeasible, the income is the beneficiary’s as it arises,
and we do not tax the trust as a discretionary trust.
