Support Trusts

Support trusts are designed to provide financial assistance to beneficiaries for their basic needs, such as education and living expenses. The trustee is only required to distribute funds as necessary to meet these needs, which helps protect the trust assets from creditors seeking to claim against the beneficiary's demands.

John establishes a support trust for his daughter, Sarah, specifying that funds are to be used only for her education and living expenses. Sarah's creditors attempt to claim against the trust, but they cannot access the trust assets because the distributions are limited to her support needs. As a result, the trust effectively shields the assets from Sarah's creditors.

Support trusts: only what you need, when you need it!

Exams may present scenarios where beneficiaries attempt to claim more than what is necessary for support, leading students to misinterpret the limits of the trust. Be careful not to confuse support trusts with discretionary trusts, which allow for broader distributions.

Questions often involve fact patterns where beneficiaries face financial difficulties, prompting students to analyze the extent of creditor claims against support trusts. Look for clues indicating whether the trust is strictly for support or has broader distribution powers.