sec.125Child beneficiaries—investment and application of unexpended trust income

sec.125 Child beneficiaries—investment and application of unexpended trust income

Subsection (2) applies if— under section 124 , a trustee may pay or apply the income of trust property for or towards a beneficiary’s maintenance, education or advancement; but some or all of the income of the trust property (the remaining income ) has not been paid or applied under section 124 during the beneficiary’s minority and while the beneficiary’s interest continues. The trustee must— invest the remaining income (and the income achieved by investing the remaining income) in authorised investments; and hold the amount of the authorised investments (including the income of the investments) as provided under subsection (3) or (4) . The amount is to be held for the beneficiary absolutely if— the beneficiary becomes an adult and the beneficiary’s interest in the income during the beneficiary’s minority was a vested interest; or the beneficiary, on becoming an adult, is entitled to the property from which the income arose in fee simple, absolute or determinable, or absolutely. If neither subsection (3) (a) nor (b) applies— the amount is to be held as an accretion to the capital of the trust property from which the income arose; and the amount and the capital are to form a single fund for all purposes. For subsection (4) , it does not matter whether the beneficiary had a vested interest in the income. Despite subsection (2) (b) , the trustee may, at any time during the beneficiary’s minority and while the beneficiary’s interest continues, pay or apply all or part of the amount of the authorised investments (including the income of the investments) for or towards the beneficiary’s maintenance, education or advancement under section 124 as if it were income arising in the current year. This section applies subject to a contrary intention in the trust instrument. In this section— authorised investment means an investment of trust funds that— is authorised by the trust instrument; or is made exercising a power of investment conferred under part 6 or under an order made under section 179 ; or is authorised by another Act or the general law. (sec.125-ssec.1) Subsection (2) applies if— under section 124 , a trustee may pay or apply the income of trust property for or towards a beneficiary’s maintenance, education or advancement; but some or all of the income of the trust property (the remaining income ) has not been paid or applied under section 124 during the beneficiary’s minority and while the beneficiary’s interest continues. (sec.125-ssec.2) The trustee must— invest the remaining income (and the income achieved by investing the remaining income) in authorised investments; and hold the amount of the authorised investments (including the income of the investments) as provided under subsection (3) or (4) . (sec.125-ssec.3) The amount is to be held for the beneficiary absolutely if— the beneficiary becomes an adult and the beneficiary’s interest in the income during the beneficiary’s minority was a vested interest; or the beneficiary, on becoming an adult, is entitled to the property from which the income arose in fee simple, absolute or determinable, or absolutely. (sec.125-ssec.4) If neither subsection (3) (a) nor (b) applies— the amount is to be held as an accretion to the capital of the trust property from which the income arose; and the amount and the capital are to form a single fund for all purposes. (sec.125-ssec.5) For subsection (4) , it does not matter whether the beneficiary had a vested interest in the income. (sec.125-ssec.6) Despite subsection (2) (b) , the trustee may, at any time during the beneficiary’s minority and while the beneficiary’s interest continues, pay or apply all or part of the amount of the authorised investments (including the income of the investments) for or towards the beneficiary’s maintenance, education or advancement under section 124 as if it were income arising in the current year. (sec.125-ssec.7) This section applies subject to a contrary intention in the trust instrument. (sec.125-ssec.8) In this section— authorised investment means an investment of trust funds that— is authorised by the trust instrument; or is made exercising a power of investment conferred under part 6 or under an order made under section 179 ; or is authorised by another Act or the general law.