Reform of trust law in Scotland

The new Trust and Succession (Scotland) Act 2024 received its Royal Assent on 30 January 2024, which heralds a new era of trust law in Scotland.

Despite how the Act has been billed, the majority of its content focuses on reforming the law relating to trusts. It consolidates the relative law into one single act and is the most substantive piece of legislation on trusts since the Trusts (Scotland) Act 1921. The 100th anniversary of the 1921 Act is perhaps one of the factors that prompted the eventual progress of the 2024 bill, after being in draft format for several years.

The Act includes minor amendments to the existing law of succession under Part 2 in ss76 to 78. These reflect the few non-controversial provisions agreed upon from the last consultation. Given that succession law itself turns 60 this year, it is hoped that further consultation on this complex area of law will follow.

In the meantime, practitioners have welcomed the Act and the modernisation of trust law.

What does the Act do?

The Act restates many of the principles that practitioners in Scotland are already familiar with. However, it does more than merely regurgitate the existing law, as it also introduces new powers and concepts, such as:

• The authority for attorneys and guardians to resign on behalf of incapable trustees;
• A higher duty of care owed by professional trustees;
• The ability of co-trustees to remove one of their own in certain situations;
• A new route to alter trust purposes;
• The roles of protectors and supervisors, with the ability to include wide powers for these parties;An extension to the law on delegation of powers by trustees, including non-administrative powers; and
• Confirmation of what trustees can consider in investment decisions for environmental, social, and governance (ESG) purposes.

As practitioners develop how these new provisions are interpreted and implemented, further case law may develop and new problems may come to light.

What does the Act not do?

On the whole, the Act did well to cover most issues faced in practice. However, there were a few potentially missed opportunities regarding the appointment and removal of trustees.

For example, there were calls for the executor of a last trustee to be able to appoint new trustees (akin to England & Wales), which were not adopted, and the new provisions around the removal of trustees with convictions are not retrospective (meaning a court action remains necessary for the removal of someone with a conviction before the Act comes into force).

That said, overall, the Act goes a long way to solving day-to-day, practical issues that trustees face, and will be a welcome change to many.

What’s next?

Whilst the succession provisions have a date for automatic enactment, the remainder of the Act requires further regulations from the Scottish ministers to bring it into force. It is hoped that enactment will come in the not too distant future, and it’s a relief just to have it on the books for now.

SJ Macdonald specialises in complex or contentious trusts and estates, and is one of the few Law Society of Scotland accredited specialists in Trust law. She also sits on the STEP Scotland Committee, regularly speaks at conferences, and authored A Practical Guide to Legal Rights in Scotland.