MSPs voted unanimously to pass The Trusts and Succession (Scotland) Bill ("the Bill") on 20thDecember . This is expected to receive Royal Asset early in the new year. Whilst a lot of the press have been reporting on the removal of a "killer" executor, there are other significant changes that the Bill will introduce. The Bill aims to modernise the law on trust, succession and executors.
This is the first review and overhaul of trust law in Scotland in over 100 years. The Trusts (Scotland) Act 1921 is the main piece of legislation currently governing Scottish trust law. Calls for reform to modernise the legislation have echoed for many years. The changes in this area are important for practitioners, trustees and interested parties alike.
This blog provides an overview of the top ten key changes the Bill makes to trust and succession law in Scotland.
1. Removal of killer executor
The reform will prevent killers from acting as an executor on their victim’s estate, by allowing a court to remove someone convicted of murder or culpable homicide from a previously nominated role of executor.
2. Removal of trustee by co-trustees
A trustee can be removed from office by a majority of their co-trustees where they are incapable, convicted of an offence which involves dishonesty, or imprisoned for an offence, contempt of court or failure to pay a fine.
Where the trustee is a professional, they can be removed from office by a majority of their co-trustees where they are no longer a member of a regulated profession or are otherwise not entitled to practice.
3. Removal of trustee by beneficiaries
A trustee can also be removed from office by a decision of all beneficiaries of a trust. This is only where the beneficiaries are absolutely entitled to the trust property, have reached the age of 18, and have capacity to make this decision.
4. Trustee duties: duty of care and professional duty of care
There is a duty on trustees to exercise "such care and diligence as any person of ordinary prudence would exercise in managing the affairs of another person."
This would be the default position under the Bill, and could not be reduced by the terms of the trust deed.
There is a higher standard of care for trustees that provide professional services in relation to trust management. The same standard of care would apply where a person has professional qualifications and is appointed as a trustee on that basis, even where they do not provide professional services in respect of trust management.
In these circumstances, the trustee must exercise the standard of care reasonably expected of a member within that profession.
5. Trustee duties: duty to provide information
There has long been debate amongst practitioners as to what information should be provided by trustees to beneficiaries. There is a duty to disclose information requested by the beneficiary in relation to the trust, unless the trustees consider it inappropriate to do so. The beneficiaries may also seek a direction from the court if they do not consider the trustees have fulfilled this duty.
6. Appointment of new trustees
Trustees are given power to assume new trustees, unless this is contrary to the terms of the trust deed. The settlor is also given power to appoint a new trustee where no capable trustee exists or is traceable. The court can also appoint an additional trustee where expedient for the administration of the trust.
7. Trustee decisions
Currently, trustees make decisions by quorum, which is a majority of the trustees accepting and surviving. This does not exclude trustees that do not have capacity. The bill addresses this by providing that decisions can be made by a majority of the trustees "for the time being able to make it."
8. Protectors
Protectors are given formal recognition in Scotland. A protector is a person appointed to monitor and provide direction to the trustees in administering the trust. They are independent of the trustees. Until now, protectors have not been formally recognised under Scots law. This is an important change which aligns Scotland with other jurisdictions that recognise trusts.
9. Succession to free estate
The surviving spouse or civil partner of the deceased will now rank second to the free estate on intestacy, behind only children and issue of the deceased. This means that, if a person dies without children surviving them, the surviving spouse or civil partner will inherit the whole estate.
10. Cohabitants
Lastly, the bill amends the Family Law (Scotland) Act 2006 by extending the time limit for cohabitants making a claim on intestacy from 6 months to 12 months.
Our personal and family team will keep an eye on developments here and provide updates when they become available. If you have any queries on the Trusts and Succession (Scotland) Bill, please get in touch with your usual Brodies contact.
Contributors
Senior Solicitor
Trainee, Brodies LLP
