The Trusts Bill was introduced into Parliament on 1 August 2017. The explanatory note to the Bill states that it “will replace the Trustee Act 1956 and the Perpetuities Act 1964 to make trust law more accessible to every day users”.
If enacted, and we expect that it will be although we also expect some further, minor changes to result from the Select Committee process, the Bill will have wide application. It will capture all trusts settled for family, charitable or other purposes. It will also have some, albeit more limited, application to commercial trusts. The courts will also be able to apply its provisions to trusts that arise as a result of the operation of law, including resulting and constructive trusts.
The new Trusts Act will not be an exhaustive code. It is intended to be complemented by the rules that have been developed by the courts over the years.
If enacted in its current form, the Bill will introduce some changes to the area of trust law.
Set out below are some key aspects of the Bill:
It addresses the duties of a trustee. It imposes on paid advisers the obligation to take reasonable steps to ensure that the settlor is aware of any changes to the default duties set out in the Bill.
It deals with trustees giving information to beneficiaries. There are two presumptions set out in the Bill - a presumption that a trustee must make “basic trust information” available to every beneficiary and a presumption that a trustee must give a beneficiary trust information requested by that person within a reasonable time. The Bill also sets out when these presumptions will not apply.
It sets out the permitted scope of exemption and indemnity clauses in trust deeds, and requires paid advisers to discuss and explain the scope of these clauses to settlors.
The Bill contains provisions on trustees’ powers. The overall thrust of these provisions is to give trustees the greatest flexibility possible to manage and administer trusts. Certain procedural requirements are introduced and these will need to be complied with.
The Bill abolishes the rule against perpetuities and provides that the maximum duration of a trust will be 125 years.
The Bill also contains a suite of provisions concerning the appointment and removal of trustees.
There are provisions empowering trustees to terminate a trust and distribute trust property and to vary or resettle a trust at the request of all the beneficiaries.
There are new provisions relating to alternative dispute resolution (ADR) including the power of a trustee to refer an internal or external trust matter to ADR.
Juliet Moses recently commented on the effect of some of the Bill’s provisions in The National Business Review (paper edition, 29 September 2017).
Please contact Juliet or your usual TGT Legal adviser if you would like further information on the Bill or how it may affect your trust arrangements.