Trustees’ powers subject to settlor's rights
None of the trustees’ powers shall be exercisable in any way that would reduce the value (whether directly or indirectly) or extent (whether directly or indirectly) of the settlor’s rights to capital or otherwise impede, or negate or adversely affect the ability of the trustees to meet payments arising in respect of the settlor's rights as they become due. This restriction shall cease on the settlor’s death.
Similarly, with an Absolute DGT the trustees will be obliged not to exercise any power that will adversely affect the donor’s rights.
What does this mean?
The trustees can distribute part of the trust fund to a beneficiary if the settlor’s/donor’s rights to the pre-selected payment stream aren’t adversely impacted.
Whether or not the settlor’s/donor’s rights are adversely affected by a distribution to a beneficiary is a matter for the trustees to determine.
An ‘over-distribution’ (i.e. one which would adversely impact the settlor’s/donor’s rights) would be a breach of trust. The trustees would be personally liable for any shortfall should the settlor’s entitlement not be fulfilled.