Katrina Lumsdaine
- Partner & Solicitor Advocate
Insights | Trusts
Trusts and Succession (Scotland) Act 2024 – A welcomed change
23 December 2024
Legislation is constantly evolving, however, when it comes to trust law in Scotland, little has changed since the Trusts (Scotland) Act 1964. The implementation of the Trusts and Succession (Scotland) Act 2024, which is to be the overarching legislation governing trusts and succession in Scotland, is therefore a welcomed change and one that introduces various significant reforms. The 2024 Act came into force on 30 January 2024; however, several provisions are not yet in force.
The 2024 Act is split into two main parts:
- Trusts (appointment and removal of trustees, powers, decision making, protectors)
- Succession (effects of divorce and intestate estates)
Trusts
Removal of trustees/executors
Prior to the 2024 Act, the ways in which a trustee could be removed was either under the provisions in the trust deed or where one of the following grounds applied – insanity, incapacity, absence from the UK and disappearance for over 6 months. Under common law, the court also has the discretion to remove executors where there has been a “malversation of office or a persistent and wilful neglect”. However, the threshold for meeting such a test is high and the courts tend to only exercise this where there is no other option available.
The 2024 Act creates five grounds on which trustees, beneficiaries, or any person with an interest in the trust property, can apply to the court to have the trustee removed:
- The trustee is unfit to carry out their duties
- The trustee is acting in a manner inconsistent with their fiduciary duties
- The trustee has neglected their duties
- The trustee is incapable
- The trustee is untraceable
The 2024 Act defines what is meant by “incapable” and “untraceable”, however, only time will tell on how these sections are to be interpreted by the courts and the test that must be met for a trustee to be removed. Of course, any application would require supporting evidence and the individual making the application would need to demonstrate some form of prejudice to the estate.
This provision is not yet in force, and it is not known at this time how, or if, this section might apply retrospectively.
Section 8 of the 2024 Act describes the circumstances where a trustee is to be considered “unfit” and therefore may be removed. Where an executor is being prosecuted or has been convicted of culpable homicide or murder, section 8 gives the court the power to remove the individual as executor of their victim’s estate. Where an individual died intestate, section 8 would prevent the courts from appointing the accused/or convicted individual, as executor. This is certainly a welcomed development that prevents executors from being in control of their victim’s estate. However, the act goes no further than murder/culpable homicide and leaves room for executors who may have been charged with domestic or sexual assault, to remain in control of their victim’s estate.
The 2024 Act also provides for the removal of trustees by co-trustees in certain situations (section 9) and removal by beneficiaries (section 10). For the former, a trustee can be removed by a majority of the other trustees, without the need to apply to court to do so. This allows for trustees to seek to remove another trustee in situations where they are incapable, convicted of an offence involving dishonesty, sentenced to prison, or imprisoned for contempt of court, which is a positive development. However, as trustees can remove another without recourse to court, there is potential this may be abused by co-trustees in some situations. For the latter, all beneficiaries must be in agreement and must be absolutely entitled to the trust property, over 18 years old and capable.
Duty to disclose
Trustees have a duty to disclose information on request by beneficiaries unless the trustee considers it inappropriate to do so (section 30). There will no doubt be ambiguity around what is considered “inappropriate” and this duty is potentially wide in scope, however, the act enables trustees to seek direction from the court in relation to requests for disclosure. Where trustees decline to provide requested information, the courts can ultimately order the information be disclosed.
Duty of care
Section 31 of the 2024 Act imposes a higher duty of care on trustees to “exercise such care and diligence as any person of ordinary prudence would exercise in managing the affairs of another person”. This section overrides any provisions contained within a trust deed which seek to lessen a trustee’s duty of care.
Section 31 places a higher duty of care on professional trustees, to act in such a way as is reasonable to expect from a member of the profession. This may mean that in practice, professional trustees have more duties than lay-trustees.
Protectors
A new statutory concept in Scots Law under the 2024 Act is that of “Protectors” (section 53). Protectors are individuals who are not trustees, however, are given powers under a trust to oversee and monitor the trust.
Sections 53 to 57 of the 2024 Act clarify the use and role of protectors in relation to trusts. It is anticipated that legislative provisions that clearly define the role, powers and duties of a protector may result in a rise in appointments of protectors.
Succession
Part 2 of the 2024 Act (Succession) came into force on 30 April 2024.
Special Destinations
The Succession (Scotland) Act 2016 introduced a change in relation to special destination clauses. Section 2 of the 2016 Act was intended to ensure that where a deceased and another person co-owned a property, the special destination clause (if there was one) ceased to have effect on the deceased’s death. This means that the deceased’s share of the property would be distributed as per their will, as opposed to automatically passing to the co-owner. Section 76 of the 2024 act seeks to clarify section 2 of the 2016 act and wording has been included to alleviate concerns that section 2 of the 2016 act could inadvertently deny the surviving co-owner their share of the property.
Intestate
Where an individual dies intestate (without a will), that individual’s estate is administered in line with the rules of intestacy. Prior to the 2024 Act, this meant that surviving spouses ranked fifth after children, parents and siblings, which understandably, could cause anxieties for any surviving spouses.
The implementation of section 77 of the 2024 Act means that surviving spouses now rank second. Where an individual dies intestate and no children survive them, the surviving spouse would inherit the whole estate.
Section 77 was implemented on 30 April 2024 and does not apply retrospectively meaning it only applies to deaths that occurred after 1 May 2024.
This is a significant change to the rules of intestacy and one that will provide greater comfort to spouses. However, the only way to ensure your estate is distributed as per your wishes, is to have a will in place.
Can we help?
As the leading law firm for contentious trusts and executries, please get in touch with Katrina Lumsdaine at katrina.lumsdaine@andersonstrathern.co.uk for more information.
The independent legal directory Legal 500 ranks Anderson Strathern as Tier 1 for Contentious Trusts and Probate, saying that ‘Katrina Lumsdaine is a calm, capable and determined litigator. She is ably assisted in contentions private client matters by Scott Flannigan, who is equally able and astute.’
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