Trusts and Succession (Scotland) Act 2024 makes significant changes to Scottish trust law

This article was written by Dale Ross. Course Tutor for STEP Advanced Certificate in Wills and Executries: Law and Practice (Scotland) and Partner at Blackadders LLP.

After some 20 years of proposals, deliberations, a report by the Scottish Law Commission, and debate in the Scottish Parliament, the Trusts and Succession (Scotland) Act 2024 passed into law on 31 January 2024, marking the biggest reform of Scottish trust law in over a century. In the event, the long-awaited passing of the Act has been something of an anticlimax. No substantive new law actually came into force on 31 January – everything was postponed to some future date or dates. As the name implies, two areas of law are (or will be) affected: trust law and successions.

Trust law

The previous trust law in Scotland was largely encompassed in the Trusts (Scotland) Act 1921 – now due to be repealed in its entirety. However, the new provisions will not come into effect until some future date or dates, under ministerial regulations. With this in mind, what are the expected changes? While many aspects of the 1921 Act are simply restated or clarified by the new legislation, there are a number of significant introductions. Many of these address the problems which arise when one or more trustees are mentally incapable of fulfilling their functions.

Trustees – appointment and removal

Trustees already have a general power to assume new trustees and to resign office – although it will remain the case that resignation is not permitted when there is just one trustee. A sole trustee, however, will continue to able to follow the standard practice of simultaneously assuming a new trustee or trustees, and resigning. Significant new provisions will enable removal of incapable trustees by the remaining trustees, and – where no capable trustee holds office – the truster (the settlor in English parlance) may appoint one, at the same time removing the existing incapable trustees. This will reduce the number of times the court’s intervention is required. The appointment of a new trustee, by whatever means, will automatically mean that the trust property is conveyed to the newly-composed body of trustees.  Previously, this was achieved in terms of a ‘Deed of Assumption and Conveyance’, but not in other appointment situations. The court continues to have the power – albeit restated – to remove trustees in certain circumstances.

Trustee decisions

The basic premise in Scots law is that trustees act by majority, rather than necessarily unanimously. Often, this can help to address problems caused by any incapax trustees – the remaining trustees, if they constitute a majority, can make valid decisions, provided that appropriate efforts are made to involve all trustees. These rules will be further relaxed in that the default for a valid trustee decision will become a majority of those able to make a decision. Incapable trustees will be excluded from this reckoning, as will trustees who are untraceable, or who are personally barred from taking part in the decision due to a personal interest. However, trustees may act even where they have a personal interest if the truster appointed the trustee in that knowledge, or if all the beneficiaries consent. The new legislation will also make clear that when executing documents, a majority of trustees will be sufficient, and the trustees may delegate the power to carry out the execution. This will resolve doubt about the competence of these procedures.

Accumulation of income

The rules restricting accumulation of income have a long history, dating back to the aftermath of the English Thelluson case at the beginning of the 19th century (Thellusson v Woodford (1799) 4 Ves 227). These restrictions will now be abolished – although many existing trust deeds will still have these rules written into them, and so remain subject to the restrictions.

Succession

Current law of succession in Scotland is largely comprised within the Succession (Scotland) Act 1964, which will continue to have effect. Two significant changes are to be made to the rules of intestate succession.  These are the only substantive provisions in the act with a scheduled commencement date – for deaths on or after 1 May 2024. At the moment, on intestacy, there is an order of preference for succession of the ‘free estate’ (i.e. the estate after prior rights for spouses (including civil partners) and legal rights.  The right of spouses to the free estate was postponed to the rights of children and their issue, siblings and their issue, and parents of the deceased. Spouses will now move up the rankings, still behind children and their issue, but ahead of all other relatives. Another small (but welcome) change will be in the time limit afforded to cohabitants of the deceased to lodge a claim with the court for provision to be made for them on intestacy. The time limit will be extended from six months to 12 months.

Dale Ross

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