Following its Royal Assent, Susanne Batchelor, Victoria Zeybek and Iona Clark of Brodies LLP explain the Trusts and Succession (Scotland) Act 2024 and its impact on trust law in Scotland.

What is the Trusts and Succession (Scotland) Act 2024?

The Trusts and Succession (Scotland) Act 2024 (the Act) received Royal Assent on 30 January 2024. The Act modernises the law on trusts, succession and executors. This has been the first review and overhaul of trust law in Scotland for over a century. Prior to this, the Trusts (Scotland) Act 1921 has been the governing piece of legislation on Scottish trust law.

The changes in this area are extremely important for practitioners, trustees and interested parties.

Trusts

Trusts play a key role in modern society. They are regularly used as a vehicle to manage and protect wealth across generations, life policies and pensions. They are also a main feature of wills, particularly where there are young or vulnerable beneficiaries.

Part 1 of the Act implements the extensive recommendations set out in the Scottish Law Commission's Report on Trusts. The key changes brought in by the Act are as follows:

• Those convicted of murder or culpable homicide are prevented from acting as an executor in their victim’s estate. The Act creates a power for the court to remove someone convicted of murder or culpable homicide from a previously nominated role of executor. This closes a key "loophole" in the law which allowed an executor to remain in charge of their victim's estate.
• 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.
• 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. 
• There is a duty imposed on trustees to exercise ‘such care and diligence as any person of ordinary prudence would exercise in managing the affairs of another person’. This is the default position under the Act and cannot 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. Professional trustees may therefore need to take additional steps in trusts where they are appointed. For example, for a solicitor who has been appointed as trustee, they may need to show that they had given the same standard of advice which would be expected from the legal profession.
• There has long been debate amongst practitioners as to what information should be provided by trustees to beneficiaries. The Act now imposes 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.
• New powers are granted in relation to the 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.
• Currently, trustees make decisions by ‘quorum’, which is a majority of the trustees accepting office and surviving. However, until now, this did not exclude trustees that did not have capacity. The Act addresses this by providing that decisions can be made by a majority of the trustees ‘for the time being able to make it’. By allowing trustee decisions to be made by a majority of those who are able to make it, this allows for much more effective management of trusts going forward when a trustee has lost capacity to make a decision.
• 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.

Succession

Part two of the Act implements changes recommended by the Scottish Law Commission's Report on Succession:

• The surviving spouse or civil partner of a 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 net intestate estate. These provisions are due to come into force at the end of April 2024.
• Lastly, the Act amends the Family Law (Scotland) Act 2006 by extending the time limit for cohabitants to make a financial claim on intestacy on a share of the deceased's estate from six months to 12 months. 

When will the Trusts and Succession (Scotland) Act 2024 come into force?

The Scottish Government is yet to confirm when the majority of the Act will be coming into force. The trust provisions are not yet enacted, and these will require regulations from the Scottish ministers to bring them into force.

The sections relating to succession will automatically come into force at the end of April. However, in light of the prominent role of trusts in Scotland, and the key changes being made to inheritance law, the new legislative framework introduced by the Act will have important consequences for trustees, beneficiaries and practitioners alike.

About the author

Susanne Batchelor is a Partner, Victoria Zeybek is a Senior Solicitor and Iona Clark is a Trainee Solicitor all at Brodies LLP.

See also

What are your legal rights in Scotland for inheritance?

What are the intestacy rules in Scotland?

What to do when someone dies outside Scotland

Find out more

Trusts and Succession (Scotland) Act 2024 (Legislation)

Trusts (Scotland) Act 1921 (Legislation)

Report on Trust Law (SLC 239) [pdf] (Scottish Law Commission)

Report on Succession (SLC 215) [pdf] (Scottish Law Commission)

Family Law (Scotland) Act 2006 (Legislation)

Images

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Publication date

15 February 2024

Any opinion expressed in this article is that of the author and the author alone, and does not necessarily represent that of The Gazette.