Trust Scotland Act 1921 centenary prompts call for reform

Emily Deane TEPThe Edinburgh Tax Network celebrated the 100th anniversary of the Trust Scotland Act 1921 by hosting a web event for stakeholders this week, which STEP attended. The centenary of the Principal Statute on 19 August has prompted the Scottish Law Commission to submit a draft bill for potential reform, the Trusts (Scotland) Bill, to the Scottish Parliament.

The web event panel consisted of Lady Ann Paton (Chair of the Scottish Law Commission), The Hon Lord Tyre and Lord Drummond-Young who discussed the overwhelming need for modernisation. They noted that current legislation has been heavily amended, making it convoluted and difficult to use, and much of the content is now largely obsolete.

The panel stressed that reform is essential in order to shape an innovative and high tech economy, comply with the more modern applications of trust law, and support businesses recovering from the pandemic.

The Scottish Law Commission’s proposals for reform include, but are not limited to, the following:

  1. recognition of trusts’ inherent simplicity and flexibility;
  2. appointment of Protectors;
  3. recognition of the commercial use of trusts. The current legislation fails to deal with commercial trusts, which have significantly developed in the last 40 years;
  4. express recognition of private purpose trusts;
  5. trustees’ powers should be flexible and wide, similar to a natural person managing his or her own affairs;
  6. courts given simplified and effective powers to deal with trust litigation;
  7. courts given power to remedy defects in the exercise of fiduciary powers;
  8. coherent provisions governing decision-making by trustees, beneficiaries’ information rights, delegation to agents, trustees’ liability for breach of trust and trustees’ liability to third parties.

The Scottish Law Commission’s review runs concurrently with the announcement of the Law Commission of England and Wales to reform trust law earlier this year under its 14th Programme of Law Reform. The EW review will focus on modernising legislation that has not been updated since 1925, and will explore modern and efficient structures in other jurisdictions to bring it up to international standards.

Both Law Commissions say it is essential to update trust legislation to uphold competitive economies and maintain their status as international financial centres.

STEP will continue to keep members apprised on both of these legislative developments.

Emily Deane TEP, STEP Technical Counsel

What are your views on a STEP testamentary capacity assessment course?

Emily Deane TEPSTEP is considering the development and implementation of an online testamentary capacity assessment course and is keen to assess members’ appetite and enthusiasm. With very little guidance or industry training currently available, an online course could be a valuable educational tool for anyone required to interact with capacity assessments.

The background to the course

In 2017 the Law Commission of England and Wales produced a consultation report on reform of the law of wills. While its work was postponed, it is likely to recommence early next year. Paragraph 2.132 of the report notes ’stakeholders have raised the possibility of introducing an accreditation scheme.. this would deal with the problems raised by the Golden Rule by directing testators and professionals towards people competent to undertake capacity assessments. An accreditation would mark out who could best assess capacity in difficult cases. Accreditation would also be persuasive in litigation should capacity be contested after the death of the testator…’.

It continued, ‘a scheme might be operated by a private organisation who would accredit lawyers, medical professionals and social workers to assess capacity… we recognise the value of private accreditation schemes’.

STEP believes it is exceptionally well-placed to offer its members an accredited scheme of this kind, if they would find it beneficial and valuable to their professional duties.

The proposed course

The course is likely to be webinar-based, comprising a series of interlinked sessions provided by relevant experts including solicitors, counsel and medics. Modules are likely to include:

  • Capacity – and the issues that affect it.
  • Law – the legal tests of testamentary capacity (for example considering the Banks v Goodfellow test in contrast to the Mental Capacity Act 2005 – and how these tests are treated by courts).
  • Practice – dealing with medics, matters to include in file notes, the importance of family trees, assessing clients.
  • The introduction of a standardised testamentary assessment questionnaire.

Other considerations are whether the course will be adapted for implementation across the common law jurisdictions, and whether completion will provide accreditation.

Join the debate

We would like to invite you to a free discussion on Wednesday 30 June at 4.30pm (BST) to explore the proposals for this course in more detail. Claire van Overdijk TEP (Chair of the STEP Mental Capacity Special Interest Group (SIG)) will moderate a panel discussion including Professor Robin Jacoby, Alexander Learmonth QC TEP, Australian neuropsychologist Dr Jane Lonie and Stephen Lawson TEP. The panel will discuss its views and there will be opportunities for questions.

Emily Deane TEP, STEP Technical Counsel

Invitation to STEP/Law Commission free webinar on its 14th Programme of Law Reform

Emily Deane TEPThe Law Commission of England and Wales has announced a public consultation on its 14th Programme of Law Reform and has published a scoping document providing background on the programme and ideas for potential projects.

STEP is hosting a joint webinar with the Law Commission on 19 May to discuss the proposals in further detail. The major areas of focus are:

The Wills Project, paused in 2017, will review the Wills Act 1837 to give it a radical overhaul, including possible reform of key principles of the legislation, modernising the language and reforming any ambiguities. Many consider that reform in this area is long overdue and there is a need to review testamentary capacity, statutory wills, supported will-making, the formalities, the protection of vulnerable testators, and of course digital aspects such as electronic signatures and execution. We understand that the Commission hopes to pick this project up again by early 2022.

The Trust Project will be an initial scoping study investigating problems with English trust law, with a view to modernising and updating it in line with international standards. It will explore the current limitations with trust law and examine how it could be updated to facilitate more competitive trust services in a global market.

The project will review alternative trust and trust-like structures available in other jurisdictions, for example, Jersey’s Foundation Law and Cayman’s Star Trusts, and will consider whether similar structures could be implemented. The project will also review the law governing certain categories of statutory trust, and identify technical trust law issues that may need general updating and reform.

The scoping document acknowledges that English trust law has not been comprehensively reviewed since 1925 and notes that Singapore and New Zealand have updated their laws and been creative in maintaining a healthy trust market, whilst other countries have implemented new trust and trust-like structures to meet demand.

The Commission has clarified that the trust project will not make recommendations regarding the taxation of trusts, for which HM Treasury has policy responsibility, and the project will therefore exclude the law of mistake which has significant tax consequences.

STEP members and non-members are welcome to join our free webinar on Wednesday 19 May at 4.30pm (BST) entitled ‘Modernising trust law for a global Britain’ in which we will explore the Law Commission’s 14th Programme of Law Reform with a specialist Law Commission and STEP panel.

Emily Deane TEP, STEP Technical Counsel