When the funds are held in trust, the beneficiary might wonder whether he or she has access to the trust funds before the date specified to receive the trust. For example, an 18-year-old person who wants to attend college might hope to use trust funds to pay the tuition, even though she isn't going to inherit the trust funds until she is 25.
Most of the time, trusts are written so that it's clear whether any of the funds can be taken out on an as-needed basis by the beneficiary. This access to funds in trust is called "encroachment". The choice of what can be accessed is determined ahead of time by the testator at the time the will is made. For example, a grandmother might set up a trust for her grandchildren and only allow an encroachment for educational purposes.
The most common scenario is that the beneficiary can have funds that are needed for his or her "maintenance, education and benefit". That's pretty broad wording that's meant to ensure that money will be available to maintain the beneficiary's general living expenses. This wording is most typical when the trust is set up for children. The parent who includes this type of encroachment is usually trying to cover off all future emergencies, and ensure that the children will have something to live on while they wait to inherit.
Sometimes trusts are set up with specific instructions that no encroachment is to be allowed.
When a beneficiary has requested some funds from trust, the trustee will usually look first to using income of the trust, rather than the original capital that was put away. If there will be a need to use some of the capital, the trustee should ensure that the will or trust deed actually allows this. And beneficiaries must realize that encroaching on capital now will decrease the amount that he or she will inherit later on.
It's important that beneficiaries understand that the existence of a power to encroach does not automatically entitle them to receive any particular payment or sum of money. The encroachment decisions are made by the trustee, who is usually the executor of the estate. The trustee has the choice to say yes or no to any request by the beneficiary for an encroachment on the trust. The idea is that the trustee will strike a balance between holding the funds in trust as directed and ensuring that the beneficiary is not destitute while waiting to inherit. The beneficiary may not like the decision, but it's the trustee's job to follow the terms of the will or trust.
The beneficiary who asks for a Ferrari but is only given a Honda may not like it, but there's a reason the funds were put into a trust. And it could be because the testator knew the beneficiary would blow the inheritance on a Ferrari.