Insights

The Trusts and Succession (Scotland) Act 2024 received Royal Assent on 30 January 2024. This is the first major review of Trust law in Scotland in over 100 years. The Act addresses some of the difficulties faced when administering Trusts and, in some cases, helpfully removes the need for Court involvement.

In this blog post we look at some of the main changes to be enacted.

Appointment of Trustees

• The Truster (or Settlor) of the Trust is given the power under the legislation to appoint a new Trustee if no capable Trustee exists or is traceable.
• Trustees are also given the power to assume an additional Trustee.

These powers are provided unless they are contrary to the terms of the Trust Deed. Many Trust Deeds will also contain these powers but the change in legislation will be helpful in cases where the deed does not contain the necessary powers to appoint Trustees.

Removal of Trustees/Executors

• The Act gives the Court the power to remove Executors/Trustees that have been convicted of murder or culpable homicide, from acting in their victim’s estate.
• A Trustee can be removed by a majority of their co-Trustees if they are incapable. This is a welcome change, as in practice, it can be difficult to administer a Trust in circumstances where a Trustee has lost capacity. This change in the law removes the need for a potentially expensive and lengthy court action. An incapable Trustee’s guardian can also resign on their behalf.
• Trustees can also be removed from office by all beneficiaries of the Trust where the beneficiaries are absolutely entitled to the Trust property. All beneficiaries need to have reached the age of 18 and have capacity to make the decision to remove a Trustee.

Decision making

• A decision made by a majority of Trustees is binding, however, the Act outlines that the decision needs to be made by a majority of those, for the time being, who are able to make it. This means that Trustees who do not have capacity, have a personal interest in the decision, or are untraceable will not be regarded as being able to make a binding decision.

Trustees’ duties

• A Trustee has a duty to exercise such care and diligence as any person of ordinary prudence would exercise in managing the affairs of another person. The expected standard of care is higher for those acting in a professional capacity. Individuals appointed as a Trustee who are not providing a professional service, but have professional qualifications, also have a higher duty of care.
• There is now a duty on Trustees to disclose to beneficiaries with an absolute interest in the Trust fund, the names of all Trustees and information to enable the beneficiaries to correspond with them. This also applies to certain other potential beneficiaries. The Trustees do however retain an element of discretion here as they must consider the disclosure of information to be appropriate. If the beneficiaries feel that the Trustees have not complied adequately with this duty, they can request direction from the Court.

Protectors

• The Truster (or Settlor) of the Trust can now appoint a “Protector” to oversee the Trustees. This was not previously recognised in Scots Law but is relevant in many other jurisdictions.

Intestate Succession

There have been a couple of major changes to the rules of succession where the deceased did not leave a Will.

• The spouse or civil partner of the deceased will rank second in the line of succession to the deceased’s “free estate”. The children of the deceased will still rank first. This change sees spouses and civil partners rank ahead of parents and siblings where they previously ranked below. Therefore, in the case of a deceased who dies leaving a spouse or civil partner but no children, their spouse or civil partner will now inherit their entire estate under the new Act.
• A cohabitant is now given 12 months to make a claim on an estate where they were previously only given 6 months under the Family Law (Scotland) Act 2006. This is a welcome change to what was previously a very tight timescale for cohabitants making a claim.

When will the changes come into force?

The changes noted above in relation to intestate succession come into force at the end of April. We do not yet know when the other provisions will be enacted as these require to brought into force by Scottish Ministers. 

If you have any questions on the Trusts and Succession (Scotland) Act 2024, please contact our Private Client team who will be happy to assist.