Legalize / United Kingdom / Scotland / Act of the Scottish Parliament

Trusts and Succession (Scotland) Act 2024

Type Act of the Scottish Parliament

Publication 2024-01-30

Last updated 2024-06-26

State In force

Jurisdiction Scotland

Department Statute Law Database

Source legislation.gov.uk

articles Not indexed

Reform history JSON API

Part 1 — Trusts

Chapter 1 — Appointment, assumption, resignation, removal and discharge of trustees

Appointment or assumption

Appointment of additional or new trustee by court: general

1

(1) The court may, as regards any trust—

(a) on the application of one or more of the trustees or of any person with an interest in the trust property, appoint an additional trustee if the court considers it necessary to do so for the administration of the trust, or

(b) if no capable trustee exists or is traceable, appoint a new trustee on the application of any person with an interest in the trust property.

(2) The court ceases to have power at common law to appoint a trustee.

(3) The making of an appointment under subsection (1)(b) removes any existing trustee from the office of trustee.

(4) This section applies irrespective of when the trust was created.

Appointment of new trustee by truster

2

(1) Except in so far as the trust deed, expressly or by implication, provides otherwise (or, in a case where there is no trust deed, the context requires or implies otherwise), if no capable trustee exists or is traceable the truster may appoint a new trustee.

(2) The making of an appointment under subsection (1) removes any existing trustee from the office of trustee.

(3) This section—

(a) applies irrespective of when the trust was created, but

(b) does not apply as respects a public trust.

Assumption of additional trustee

3

(1) Except in so far as the trust deed, expressly or by implication, provides otherwise (or, in a case where there is no trust deed, the context requires or implies otherwise), the trustees may assume an additional trustee.

(2) Subsection (3) applies where—

(a) a protector has been appointed in respect of the trust,

(b) there has been conferred on the protector, by virtue of paragraph (b) of section 53 (3), the power to direct the assumption of an additional trustee, and

(3) An additional trustee must, without delay, be assumed by the other trustees.

(4) This section applies irrespective of when the trust was created.

Operation of appointment or assumption as general conveyance of trust property

4

(1) The appointment under section 1 (1)(a), or assumption under section 3, of an additional trustee operates as a general conveyance of the trust property in favour, jointly, of the additional trustee and the existing trustees.

(2) The appointment, under section 1 (1)(b) or 2 (1), of a new trustee operates as a general conveyance of the trust property in favour of the new trustee.

(3) The appointment of a trustee, on the application under section 66 of an ex officio trustee, operates as a general conveyance of the trust property—

(a) in favour, jointly, of the appointed trustee and the existing trustees (other than the applicant), or

(b) if there are no existing trustees (other than the applicant), in favour of the appointed trustee.

(4) This section applies—

(a) irrespective of when the trust was created, but

(b) only as respects an assumption which takes place, or an appointment which is made, after the section comes into force.

Resignation and removal

Resignation of trustee

5

(1) Except in so far as the trust deed, expressly or by implication, provides otherwise (or, in a case where there is no trust deed, the context requires or implies otherwise), a trustee has power to resign office.

(2) But where subsection (3) applies and the trustee has accepted office or, after intimation of their appointment, has acted in a way which indicates that they have accepted office, the trustee may do so only after—

(a) an additional trustee is assumed or appointed, or

(b) a judicial factor is appointed to administer the trust.

(3) This subsection applies where—

(a) the trustee is a sole trustee, or

(b) the trustee is, in the trustee’s opinion, the only remaining trustee who is both capable and traceable.

(4) Any resignation given in breach of subsection (2) is of no effect.

(5) Any resignation given under this section—

(a) must be intimated to—

(i) all of the other trustees who are traceable, and

(ii) any judicial factor appointed to administer the trust, and

(b) is effective from the date on which such intimation is given.

(6) This section applies—

(a) irrespective of when the trust was created, but

(b) only as respects a resignation given after the section comes into force.

Resignation of incapable trustee

6

(1) Where a trustee is incapable, the power in section 5(1) may be exercised by the trustee’s guardian (“G”) on behalf of the trustee (and in such a case, the resignation will, for the purposes of this Act, be treated as a resignation by the trustee).

(2) But where subsection (3) applies, G may do so only after—

(a) an additional trustee is assumed under section 3,

(b) an additional trustee is appointed—

(i) under section 1 or 2, or

(ii) by G, or

(3) This subsection applies where—

(a) the incapable trustee is a sole trustee, or

(b) in G’s opinion, no other trustee exists who is both capable and traceable.

(4) Any resignation given by G on behalf of the incapable trustee in breach of subsection (2) is of no effect.

(5) Section 4(2) (general conveyance of trust property) applies to an appointment of a trustee by G under subsection (2)(b)(ii) as it applies to an appointment of a trustee under section 1(1)(b) or 2(1).

(6) Section 5(5) applies to a resignation given by G on behalf of an incapable trustee in accordance with this section as it applies to a resignation given by a trustee under section 5.

(7) This section applies—

(a) irrespective of when the trust was created, but

(b) only as respects a resignation given after this section comes into force.

Removal of trustee by court

7

(1) Where a trustee—

(a) is unfit to carry out the duties of a trustee,

(b) purports to carry out those duties but does so in a way which is inconsistent with, or might be inconsistent with, a trustee’s fiduciary duty,

(d) is incapable, or

(e) is untraceable,

the court may, on the application of one or more of the other trustees, of a beneficiary or of any other person with an interest in the trust property, remove the trustee from office.

(2) The court ceases to have power at common law to remove a trustee.

(3) This section applies irrespective of when the trust was created.

Removal of certain trustees by court: unfitness

8

(1) For the purposes of section 7(1)(a), a trustee to whom subsection (2) applies is to be regarded as unfit to carry out the duties of a trustee (and so may be removed from office).

(2) This subsection applies to any trustee—

(a) who is—

(i) an executor nominate of a testator (“T”),

(ii) a trustee of a trust established by T under a testamentary writing, or

(iii) an executor dative appointed in respect of the estate of a deceased person (“D”), and

(b) who—

(i) is being prosecuted in Scotland for the murder or culpable homicide of T or, as the case may be, D,

(ii) has been convicted, whether before or after the coming into force of this section, in Scotland of such an offence as regards T or, as the case may be, D,

(iii) is being prosecuted in a jurisdiction outside Scotland for an offence which, in the opinion of the court, is equivalent to the murder or culpable homicide of T or, as the case may be, D, or

(iv) has been convicted, whether before or after the coming into force of this section, in a jurisdiction outside Scotland of such an offence as regards T or, as the case may be, D.

(3) For the purposes of subsection (2)(b), a trustee is to be regarded as being prosecuted for an offence if—

(a) a prosecutor has initiated proceedings against the trustee in respect of the offence, and

(b) those proceedings have not been dismissed or resulted in the conviction or acquittal of the trustee in respect of the offence.

(4) This section is without prejudice to any power of the court to find that a trustee to whom subsection (2)(a) applies (but to whom subsection (2)(b) does not apply) is unfit to carry out the duties of a trustee as a result of—

(a) having acted (or being suspected of having acted) in a manner that caused or contributed to the death of T or, as the case may be, D, or

(b) having otherwise been involved (or being suspected of having otherwise been involved) in the death of T or, as the case may be, D.

Removal of trustee by co-trustees

9

(1) A trustee who is—

(a) incapable,

(b) convicted of an offence involving dishonesty,

(d) imprisoned for contempt of court or for not having paid a fine,

may be removed from office by a majority of the other trustees.

(2) Except in so far as the trust deed expressly provides otherwise, a trustee who is—

(a) a member of a regulated profession (such as a solicitor, accountant, financial adviser or teacher), and

(b) appointed or assumed as trustee to provide professional services in relation to managing the affairs of trusts in the course of business,

may, in the circumstances described in subsection (3), be removed from office by a majority of the other trustees.

(3) The circumstances are that the trustee—

(a) is no longer a member of the regulated profession in question, or

(b) is such a member, but is not entitled to practise as such.

(4) In a case where—

(a) two or more trustees meet the description in subsection (2)(a) and (b), and

(b) the circumstances described in subsection (3) apply to each of them,

neither (or none) of those trustees are, for the purpose of section 14, to be regarded as able to make a decision in respect of their removal.

(5) Subsection (6) applies where—

(a) a protector has been appointed in respect of the trust,

(b) there has been conferred on the protector, by virtue of paragraph (a) of section 53 (3), the power to direct the removal of a trustee from office, and

(6) The trustee to whom the direction relates must, without delay, be removed from office by the other trustees.

(7) A person who is removed from office as trustee under this section is to be given notice of the decision to remove and the date on which it was made as soon as reasonably practicable after it is made.

(8) This section applies—

(a) irrespective of when the trust was created, but

(b) paragraphs (b) to (d) of subsection (1) are to be disregarded in relation to, respectively, a conviction obtained, a sentence passed or an imprisonment effected before the section comes into force.

Removal of trustee by beneficiaries

10

(1) A trustee may, subject to subsection (2), be removed from office by the beneficiaries provided that the removal is agreed to by them all and that at the time of reaching such agreement—

(a) they are absolutely entitled to the trust property, and

(b) each of them—

(i) has attained the age of 18 years, and

(ii) is capable.

(2) Subsection (1) does not apply while there subsists—

(a) a trust purpose which cannot be secured, or

(b) a right to be indemnified which cannot be preserved,

without the retention of some or all of the trust property.

(3) A person who is removed from office as trustee under this section is to be given notice of the decision to remove and the date on which it was made as soon as reasonably practicable after it is made.

(4) This section—

(a) applies irrespective of when the trust was created, but

(b) does not apply as respects a private purpose trust.

Saving as respects liability of trustees

11

The appointment, or as the case may be the assumption, resignation or removal, of a trustee under any of sections 1 to 3, 5 to 10 and 66 does not affect liability incurred by the trustee or by any other trustee prior to the appointment, assumption, resignation or removal.

Discharge

Discharge where trustee has resigned, died or been removed from office

12

(1) Where a trustee—

(a) resigns, the remaining trustees or the beneficiaries may discharge that trustee or that trustee’s representatives of that trustee’s acts and intromissions,

(b) dies, the remaining trustees or the beneficiaries may discharge that trustee’s representatives of that trustee’s acts and intromissions,

(c) is removed from office under section 7 or 9, the remaining trustees or the beneficiaries may discharge that trustee or that trustee’s representatives of that trustee’s acts and intromissions,

(d) is removed from office under section 10, the beneficiaries may discharge that trustee or that trustee’s representatives of that trustee’s acts and intromissions.

(2) If—

(a) discharge under subsection (1)(a), (b) or (c) cannot be obtained from the remaining trustees, and

(b) the beneficiaries of the trust refuse, or are unable for any reason, to grant it,

the court may, on the application of that trustee or as the case may be of that trustee’s guardian or representatives and after such intimation and inquiry as the court thinks necessary, grant it.

(3) If the beneficiaries of the trust refuse, or are unable for any reason, to grant discharge under subsection (1)(d), the court may, on the application of that trustee or as the case may be of that trustee’s guardian or representatives and after such intimation and inquiry as the court thinks necessary, grant it.

(4) In this section, the references to beneficiaries are, in relation to any beneficiary who has not attained the age of 16 years or is incapable, to be construed as references to an appropriate person in relation to the beneficiary (see section 81(2)).

(5) This section applies irrespective of when the trust was created.

Chapter 2 — Decision-making by trustees

Decisions: preliminary

13

(1) This section applies in relation to any decision of the trustees which is to bind them.

(2) Except in so far as the trust deed, expressly or by implication, provides otherwise (or, in a case where there is no trust deed, the context requires or implies otherwise), in so far as is reasonably practicable a trustee—

(a) must receive adequate notice of the matter as regards which the decision is to be made, and

(b) must be afforded an opportunity (whether or not at a meeting of the trustees) to express an opinion in the matter before the decision is taken.

(3) But a decision which is invalid by virtue of non-compliance with subsection (2) may be homologated by the trustee in question.

(4) This section applies—

(a) irrespective of when the trust was created, but

(b) only as regards a decision taken after the section comes into force.

Making of decision

14

(1) Except in so far as the trust deed, expressly or by implication, provides otherwise (or, in a case where there is no trust deed, the context requires or implies otherwise), a decision binds the trustees only if made by a majority of those for the time being able to make it.

(2) Except in so far as the trust deed, expressly or by implication, provides otherwise (or, in a case where there is no trust deed, the context requires or implies otherwise), for the purposes of subsection (1) a trustee is not to be regarded as able to make a decision who—

(a) has or might have a personal interest in the decision,

(b) is incapable, or

(3) But subsection (2)(a) is to be disregarded if (either or both)—

(a) all the beneficiaries know of the personal interest and consent to the trustee acting,

(b) the truster appointed the trustee in the knowledge that such a decision might require to be taken and that the trustee would have a personal interest in it (or must be taken to have appointed the trustee in that knowledge).

(4) For the purposes of subsection (2)(a), a trustee of a public trust is not to be regarded as having a personal interest in a decision insofar as—

(a) the decision is intended to benefit the public or a particular section of it, and

(b) the trustee in question may derive a benefit from the decision solely as a result of being a member of the public or, as the case may be, the particular section of it.

(5) In subsection (3)(a), the reference to beneficiaries is, in relation to any beneficiary who has not attained the age of 16 years or is incapable, to be construed as a reference to an appropriate person in relation to the beneficiary (see section 81(2)).

(6) This section applies—

(a) irrespective of when the trust was created, but

(b) only as regards a decision taken after the section comes into force.

Chapter 3 — Powers and duties of trustees

Powers: general

General powers of trustees

15

(1) Except in so far as the trust deed expressly provides otherwise (or, in a case where there is no trust deed, the context requires or implies otherwise) the trustees have in relation to the trust property all the powers of a natural person beneficially entitled to the property.

(2) But this section is without prejudice to—

(a) a trustee’s fiduciary duty (including a trustee’s duty to fulfil the trust purposes),

(b) a trustee’s duty of care, and

(3) This section applies irrespective of when the trust was created.

Conferring of additional powers by court

16

(1) The court may, on the application of the trustees, grant them additional powers of administration or management in relation to the trust property (being powers specified in the application).

(2) Before granting additional powers under subsection (1), the court must—

(a) take into account any objection timeously made by virtue of subsection (3), and

(b) be satisfied that the trustees having the additional powers in question would benefit the future administration or management of the trust property.

(3) An application under subsection (1) is to be intimated to the persons mentioned in subsection (4), any of whom may object to its being granted.

(4) The persons are—

(a) any supervisor,

(b) any protector,

(d) such other persons as the court may specify.

(5) The court is to consider specifying under subsection (4)(d) any beneficiary who has a contingent interest, and any potential beneficiary, under the trust but—

(a) need not specify under that subsection any such beneficiary or potential beneficiary, and

(b) may specify under it a person other than any such beneficiary or potential beneficiary.

(6) The court may, in granting powers under subsection (1), impose such conditions as to the exercise of those powers as it thinks fit.

(7) This section applies irrespective of when the trust was created.

Power to take out insurance

17

(1) Except in so far as the trust deed expressly provides otherwise, a trustee has power to take out such insurance as it is reasonable to take out against personal liability arising from the trustee’s actings in carrying out the duties of a trustee.

(2) In subsection (1), the reference to actings is to be construed as including intentionally not acting in some matter.

(3) The expense of taking out the insurance is to be paid out of the trust property.

(4) This section applies irrespective of when the trust was created.

Investment

Power of investment

18

(1) The trustees have the power to make any kind of investment of trust property, including an investment in heritable property, except in so far as—

(a) the trust deed, expressly or by implication, provides otherwise, or

(b) in a case where there is no trust deed, the context requires or implies otherwise.

(2) The power to act under subsection (1)—

(a) is subject to any restriction or exclusion imposed by or under any enactment, and

(b) is not conferred on trustees—

(i) of an authorised unit trust, or

(ii) under any other trust who are entitled by or under another enactment to make investments of trust property.

(3) A term—

(a) relating to the powers of a trustee and contained in a trust deed executed before 3rd August 1961, or

(b) restricting the powers of investment of a trustee to those conferred by the Trustee Investments Act 1961 and contained in a trust deed executed on or after that date,

is not to be treated as restricting or excluding the power to act under subsection (1).

(4) The reference, in paragraph (b) of subsection (3), to a trustee does not include a reference to a trustee under a trust constituted by a private or local Act of Parliament or a private Act of the Scottish Parliament; and in that paragraph “trust deed” is to be construed accordingly.

(5) In this section, “authorised unit trust” means a unit trust scheme in the case of which an order under section 243 of the Financial Services and Markets Act 2000 is in force.

(6) This section applies irrespective of when the trust was created.

Exercise of power of investment

19

(1) Before acting under section 18 (1) the trustees—

(a) are to have regard to—

(i) the suitability to the trust of the proposed investment, and

(ii) the need for diversification of investments of the trust in so far as is appropriate to the circumstances of the trust, and

(b) are (except where subsection (3) applies) to obtain and consider proper advice about the way in which the power in question should be exercised.

(2) When reviewing the investments of the trust, the trustees are (except where subsection (3) applies) to obtain and consider proper advice about whether the investments should be varied.

(3) If the trustees reasonably conclude that in all the circumstances it is unnecessary or inappropriate to obtain such advice, they need not obtain it.

(4) In this section, “proper advice” means the advice of a person who is reasonably believed by the trustees, on the basis of the person’s—

(a) ability, and

(b) practical experience of financial and other matters relating to the proposed investment,

to be qualified to give it.

(5) This section applies irrespective of when the trust was created.

Exercise of power of investment: further provision

20

(1) For the purposes of section 19(1) and (2), where two or more proposed investments are suitable for the trust, the trustees may (except in so far as the trust deed, expressly or by implication provides otherwise) take into account appropriate non-financial considerations in determining which investment to make.

(2) An appropriate non-financial consideration may be (either or both)—

(a) a consideration that one investment is more consistent with the purposes of the trust than the other investment,

(b) an ethical, social or environmental consideration.

(3) This section—

(a) does not apply as respects a trust created before the section comes into force, and

(b) is without prejudice to any other power of trustees to take into account non-financial considerations in relation to determining investments.

Sale of property

Charitable trusts: sale of property

21

(1) Except in so far as the trust deed expressly or by implication provides otherwise, the trustees of a charitable trust are not under a duty to achieve best value when selling trust property where—

(a) the property being sold is heritable property, and

(b) the purchaser is a charity.

(2) But this section is without prejudice to any duty imposed by the Charities and Trustee Investment (Scotland) Act 2005 to act in the interests of the charity (see, in particular, section 66 of that Act).

(3) For the purposes of this section, a “charity” is a non-natural person—

(a) registered in the Scottish Charity Register,

(b) which—

(i) is registered as a charity in England and Wales in accordance with section 30 of the Charities Act 2011, or

(ii) by virtue of subsection (2) of that section, is not required to register as a charity under that section,

(i) is registered as a charity in Northern Ireland in accordance with section 16 of the Charities Act (Northern Ireland) 2008, or

(ii) by virtue of subsection (2A) of that section, is not required to register as a charity under that section.

(4) The Scottish Ministers may by regulations modify subsection (3) so as to specify further descriptions of person who are a charity for the purposes of this section.

(5) Regulations under this section are subject to the affirmative procedure.

(6) This section—

(a) does not apply as respects a trust created before the section comes into force, and

(b) is without prejudice to any other power of trustees in relation to the selling of trust property.

Delegation and the appointment of agents and nominees

Delegation and the appointment of agents

22

(1) Subject to the provisions of this section and except in so far as the trust deed expressly provides otherwise, the trustees may delegate the exercise of any of their powers and in particular may—

(a) appoint an agent,

(b) authorise a person so appointed to execute a deed or other document on behalf of the body of trustees.

(2) Except in so far as the trust deed expressly provides otherwise, the trustees have (and are to be taken always to have had) the power to authorise an agent to exercise any of their investment management functions—

(a) at the agent’s discretion, or

(b) in such other manner as the trustees may direct.

(3) Without prejudice to the generality of subsections (1) and (2), a person who is a trustee may be—

(a) appointed or authorised under subsection (1),

(b) authorised under subsection (2).

(4) Except in so far as the trust deed expressly provides otherwise, the trustees may pay such remuneration as they consider reasonable to any person appointed or authorised under subsection (1).

(5) Except in so far as the trust deed expressly provides otherwise, the reference in subsection (1) to the trustee’s powers does not include a reference to a power—

(a) relating to whether or in what way assets of the trust should be distributed,

(b) relating to whether any fee or other payment due to be made out of the trust funds should be made out of capital or income,

(d) which is conferred by any other enactment or by the trust deed and permits the trustees—

(i) to delegate any of their functions, or

(ii) to appoint a person to act as a nominee in relation to the trust property.

(6) In subsection (2), “investment management functions” means functions relating to the management of investments of the trust property, heritable as well as moveable.

(7) Subsections (1) and (2) are subject to any restriction or exclusion imposed by or under any enactment.

(8) This section applies irrespective of when the trust was created.

Appointment of nominees

23

(1) Except in so far as the trust deed expressly provides otherwise, the trustees may, for the purpose of the exercise of any of their powers—

(a) appoint a person to act as their nominee in relation to such of the trust property, heritable as well as moveable, as they may determine (in this section referred to as the “determined assets”), and

(b) take such steps as are requisite to secure the transfer of title to the determined assets to the nominee.

(2) Without prejudice to the generality of subsection (1), reference in that subsection to the powers of the trustees includes a reference to their investment management functions (as defined in section 22 (6)).

(3) Determined assets held by the nominee are held on trust for the trustees by the nominee (irrespective of any purported agreement to the contrary).

(4) Determined assets title to which is transferred to the nominee may include clients’ money.

(5) Without prejudice to subsection (3), subsection (1) is subject to any restriction or exclusion imposed by or under any enactment.

(6) A person is not to be appointed under subsection (1)(a) unless the trustees reasonably believe—

(a) the appointment is appropriate in the circumstances of the trust, and

(b) the person has the skills, knowledge and expertise it is reasonable to expect of one who is to act as a nominee.

(7) An appointment under subsection (1)(a) is—

(a) to be made in writing,

(b) to be subject to the trustees obtaining, as soon as is reasonably practicable, the written acknowledgment of the nominee that the determined assets are held on trust for the trustees by the nominee,

(i) direct the nominee, and

(ii) revoke the appointment, and

(d) subject to subsection (8), otherwise to be on such terms as to suitable remuneration and other matters as the trustees may determine.

(8) The trustees are not to appoint a nominee on any of the terms mentioned in subsection (9) unless they have good cause to do so.

(9) The terms are—

(a) a term permitting the nominee to appoint a substitute,

(b) a term restricting the liability of the nominee, or of any substitute, to the trustees or to any beneficiary, and

(c) a term permitting the nominee, or any substitute, to act in circumstances capable of giving rise to a conflict of interest.

(10) While a nominee continues to act for the trust, the trustees are—

(a) to keep under review—

(i) the arrangements under which the nominee acts, and

(ii) how those arrangements are being put into effect,

(b) to consider, if circumstances make it appropriate to do so, whether there is a need to exercise their power—

(i) to direct the nominee, or

(ii) to revoke the nominee’s appointment.

(11) The trustees are to exercise either or both of the powers mentioned in subsection (10)(b) if they consider that there is a need to do so.

(12) The Scottish Ministers may, by regulations, specify particular circumstances which may constitute a good cause for the purpose of subsection (8).

(13) Regulations under this section are subject to the negative procedure.

(14) This section applies irrespective of when the trust was created.

Power of advancement

Power to advance from capital

24

(1) Except in so far as the trust deed expressly provides otherwise (or, in a case where there is no trust deed, the context requires otherwise) the trustees may, provided that the requirements of subsections (4) and (5) are satisfied, advance all or part of the trust capital to a beneficiary for the benefit of the beneficiary.

(2) The advance may be on such conditions (if any) as the trustees consider it reasonable to impose.

(3) But the trustees may subsequently waive or vary any condition imposed under subsection (2) if they consider it appropriate to do so.

(4) A right to the capital advanced must, as at the date on which the advance is made, be destined to vest in the beneficiary—

(a) unconditionally,

(b) subject, if an uncertain future event were to occur, to defeasance or diminution, or

(5) Either—

(a) the consent must have been obtained of any person who has a prior interest as respects the trust property, being an interest which would be prejudiced were the advance made, or

(b) authorisation to make the advance must have been obtained from the court—

(i) on an application to it in that regard by the trustees or by any person with an interest in the trust property, and

(ii) on its being satisfied that any person whose consent is (but for this paragraph) required by paragraph (a) is either withholding consent unreasonably or does not have capacity to give consent.

(6) Authorisation under subsection (5)(b) may be granted subject to such conditions (if any) as the court thinks fit to impose.

(7) Any amount advanced under this section (other than an amount which has been repaid) must be brought into account by the trustees as part of the share in the trust property to which the beneficiary is, or will become, entitled.

(8) For the purposes of subsection (7), the value of the advance is its market value as at the date on which the advance is made (interest in relation to the advance being disregarded).

(9) It is not an objection to an advance to the beneficiary under this section that the advance is made by setting up a new trust for the benefit of the beneficiary and transferring the capital advanced as assets to be held in that new trust (or, without setting up a new trust, by transferring the capital advanced to assets for the time being held in any trust for the benefit of the beneficiary).

(10) Subsection (9) applies whether or not any third party gains incidental benefit from the transfer or as the case may be from the setting up of the new trust.

(11) The trustees are not liable for any loss which the trust property may incur by virtue of—

(a) a condition imposed by them under subsection (2),

(b) a condition which might have been so imposed not having been so imposed,

(12) This section applies—

(a) irrespective of when the trust was created, but

(b) only as respects an advance made after the section comes into force.

Apportionment

Exercise of power to apportion between or among beneficiaries

25

(1) Except in so far as the trust deed, expressly or by implication, provides otherwise, no exercise by a trustee of a power to apportion funds or other property between or among certain beneficiaries is invalid on the ground only that—

(a) an insubstantial, illusory or nominal part is apportioned to (or left to devolve unapportioned upon) one of the beneficiaries, or

(b) one of the beneficiaries is not apportioned a part.

(2) But subsection (1) is without prejudice to the grounds on which the court may grant a remedy under section 68.

(3) This section applies irrespective of when the trust was created.

Time apportionment

26

(1) Except in so far as the trust deed expressly provides otherwise (or, in a case where there is no trust deed, the context requires otherwise), the trustees may determine that amounts mentioned in section 2 of the Apportionment Act 1870 (which provides for rents, dividends and other periodical payments to be apportionable in respect of time) are—

(a) to be apportioned as mentioned in that section, or

(b) not to be apportioned in such manner, but instead to accrue as they arise.

(2) This section applies irrespective of when the trust was created.

Apportionment: disapplication of certain rules

27

(1) Any rule of law relating to the allocation and apportionment of trust receipts and outgoings ceases to have effect in relation to a trust, irrespective of when that trust was created.

(2) Subsection (1) does not affect allocation and apportionment which falls to be made before this section comes into force.

Payments from income

Power to make payments etc. from income

28

(1) Subject to subsection (8) and except in so far as the trust deed, expressly or by implication, provides otherwise (or, in a case where there is no trust deed, the context requires or implies otherwise) the trustees may, provided that the requirements of subsections (4) and (5) are satisfied, pay or otherwise apply all or part of the trust income (whether as it arises or after it has accumulated) to a beneficiary for the benefit of the beneficiary.

(2) The paying or applying may be on such conditions (if any) as the trustees consider it reasonable to impose.

(3) But the trustees may subsequently waive or vary any condition imposed under subsection (2) if they consider it appropriate to do so.

(4) The income paid or applied must, as at the date on which it is paid or applied, be income from capital destined to vest in the beneficiary—

(a) unconditionally,

(b) subject, if an uncertain future event were to occur, to defeasance or diminution, or

(5) The trustees must be satisfied, as at the date mentioned in subsection (4), that no person other than the beneficiary is entitled to the income paid or applied.

(6) Any amount paid or applied under this section (other than an amount which has been repaid) must be brought into account by the trustees as part of the share in the trust property to which the beneficiary is, or will become, entitled.

(7) For the purposes of subsection (6), the payment or application is to be deemed to be for a consideration equal to the market value of the payment or application as at the date mentioned in subsection (4) (interest in relation to the payment or application being disregarded).

(8) If the trust deed directs or permits the trustees to accumulate income, the authorisation of the court must be obtained under subsection (9) to any exercise of their power under subsection (1).

(9) Such authorisation may be granted by the court on an application to it in that regard by the trustees or by any person with an interest.

(10) Authorisation under subsection (9) may be granted subject to such conditions (if any) as the court thinks fit to impose.

(11) The trustees are not liable for any loss which the trust property may incur by virtue of—

(a) a condition imposed by them under subsection (2),

(b) a condition which might have been so imposed not having been so imposed,

(12) This section applies—

(a) irrespective of when the trust was created, but

(b) only as regards a payment, or application of income, made after the section comes into force.

Duty to provide information

Trustees’ duty to provide information other than on request

29

(1) It is the duty of the trustees, on becoming aware that a person is as described in subsection (2)—

(a) to inform the person (or if the person has not attained the age of 16 years, or is incapable, an appropriate person in relation to that person (see section 81(2))) accordingly, and

(b) to disclose with that information—

(i) the names of all the trustees, and

(ii) information sufficient to enable the person (or an appropriate person in relation to that person) to enter readily into correspondence with them.

(2) The persons are—

(a) a beneficiary who has a vested interest in the trust property,

(b) any other beneficiary who the trustees reasonably consider ought to be informed under subsection (1), and

(c) a potential beneficiary, the imminence of whose becoming a beneficiary appears to the trustees to be such that it would be unreasonable not to inform that potential beneficiary under subsection (1).

(3) For the purposes of this section, trustees must take such steps as appear to them to be appropriate in all the circumstances to ensure that beneficiaries and potential beneficiaries are identified and traced.

(4) The information is to be provided within such period as is reasonable in all the circumstances; except that if the person to be informed is a beneficiary who has acquired an immediate interest in the trust property the information must be provided as soon as is reasonably practicable.

(5) In providing information, or making a disclosure, to any person under subsection (1), the trustees need not—

(a) give any advice to that person, or

(b) comment upon the information or disclosure in question.

(6) If information provided by virtue of subsection (1) ceases to be current, the trustees must without delay inform the beneficiary or potential beneficiary (or an appropriate person in relation to the beneficiary or potential beneficiary) of such changes as are needed to update it.

(7) This section—

(a) applies irrespective of when the trust was created, but

(b) except in the case of a beneficiary who has a personal interest in the trust property, does not apply as respects a private purpose trust.

Trustees’ duty to provide information on request

30

(1) It is the duty of the trustees to disclose—

(a) to a beneficiary or potential beneficiary,

(b) where the beneficiary or potential beneficiary has not attained the age of 16 years, or is incapable, to an appropriate person in relation to that person (see section 81(2)),

(c) where the beneficiary or potential beneficiary has attained the age of 16 years and is capable but has instructed a solicitor to act on that person’s behalf, to the solicitor, or

(d) where the beneficiary or potential beneficiary has (wholly or in part) assigned that person’s interest in the trust, to the assignee,

information requested by the beneficiary (or as the case may be by the potential beneficiary, appropriate person, solicitor or assignee) as regards the trust unless the trustees consider it would be inappropriate, in all the circumstances, to make the disclosure.

(2) But subsection (1) is subject—

(a) to the express provisions of the trust deed, and

(b) to the following provisions of this section.

(3) Subsections (1) and (9) do not apply where—

(a) a person is a potential beneficiary (or an appropriate person in relation to, solicitor or assignee of, such a person), and

(b) that person’s interest in the trust is, or would be, so remote as to be of negligible value.

(4) The disclosure—

(a) is to be made in such a way as is appropriate in all the circumstances, and

(b) may be conditional on payment of such expenses as are reasonably incurred by the trustees in making it.

(5) Any duty arising by virtue of paragraph (d) of subsection (1) is without prejudice to any other duty under that subsection.

(6) A disclosure under subsection (1) is to be made as soon as is reasonably practicable after receipt of the request.

(7) It is to be presumed that the trustees will not ordinarily disclose under subsection (1) information requested in respect of—

(a) some other beneficiary or potential beneficiary,

(b) the trustees’ deliberations or reasons for their decisions, or

(c) letters of wishes (that is to say documents in which an account is given, whether or not by the truster, of circumstances which are to be relevant to the exercise by them of a discretion).

(8) The trustees may seek a direction from the court as to the fulfilment of their duty under subsection (1) in relation to a particular request.

(9) The court may, on the application of any person to whom the trustees have declined to disclose information requested under subsection (1), direct the trustees to disclose the information (or such part of that information as may be specified by the court) to the person.

(10) At any time after the trust is created, a person mentioned in subsection (12) may apply to the court for a determination as to whether a limitation on disclosure of information as respects the trust, imposed by the express provisions of the trust deed, is reasonable in all the circumstances.

(11) If, on an application under subsection (10) as respects such a limitation, the court determines that the limitation is not reasonable in all the circumstances it may—

(a) alter the limitation to such extent as it considers expedient having regard to the need for a beneficiary or potential beneficiary to be able to hold the trustees to account at an appropriate time, or

(b) rescind the limitation.

(12) The persons are—

(a) the trustees,

(b) in the case of an inter vivos trust, the truster,

(d) a beneficiary or potential beneficiary,

(e) a descendant or ancestor of a beneficiary or potential beneficiary,

(f) an appropriate person in relation to a beneficiary or potential beneficiary,

(g) a judicial factor, and

(h) unless the trust deed expressly or impliedly excludes the possibility—

(i) a protector, and

(ii) a supervisor.

(13) Subsection (10) does not apply where—

(a) a person is—

(i) a descendant of the truster,

(ii) a potential beneficiary (or an appropriate person in relation to, solicitor or assignee of, such a person), or

(iii) a descendant or ancestor of a beneficiary or potential beneficiary, and

(b) that person’s interest in the trust is, or would be, so remote as to be of negligible value.

(14) This section—

(a) applies irrespective of when the trust was created, but

(b) except in the case of a beneficiary who has a personal interest in the trust property, does not apply as respects a private purpose trust.

(15) But subsection (14)(a) is subject to subsection (16).

(16) In the period of a year beginning with the day on which this section comes into force, this section does not apply to a trust created before that day.

Trustees’ duty of care etc.

31

(1) Subject to subsections (2) and (3), a trustee, in managing the affairs of the trust, is required to exercise such care and diligence as any person of ordinary prudence would exercise in managing the affairs of another person.

(2) A person who in the course of business provides professional services in relation to managing the affairs of trusts is required, where appointed or assumed as a trustee and remunerated for carrying out the duties of that office, to exercise such skill, care and diligence as it is reasonable to expect from a member of the profession in question.

(3) A natural person with professional qualifications who is appointed or assumed as a trustee but is not a person mentioned in subsection (2) is—

(a) if expressly instructed by or on behalf of the trustees to provide professional services or advice to the trust, required (whether remunerated or not) to exercise such skill, care and diligence in providing those services or that advice as it is reasonable to expect from a member of the profession in question, and

(b) if not so instructed, required only to exercise such care and diligence as is mentioned in subsection (1).

(4) A provision of a trust deed is of no effect in so far as the provision purports—

(a) to lessen a requirement imposed by subsections (1) to (3),

(b) to relieve a trustee from liability arising from a failure to exercise the skill, care or diligence required of that trustee by subsection (2) or (3)(a),

(c) in the case of a trustee who is required only to exercise such care and diligence as is mentioned in subsection (1), to relieve the trustee from liability arising by virtue of the trustee’s gross negligence,

(d) to exclude or restrict any right or remedy in relation to a liability arising as mentioned in paragraph (b) or (c),

(e) to indemnify a trustee for any liability arising as mentioned in either of those paragraphs,

(f) to subject a person to any prejudice in respect of pursuing such a right or remedy,

(g) to exclude or restrict any rule of evidence or procedure in its application to the pursuit of such a right or remedy, or

(h) to make a liability arising as mentioned in paragraph (b) or (c), or its enforcement, subject to restrictive or onerous conditions.

(5) This section applies—

(a) irrespective of when the trust was created, but

(b) only as respects managing the affairs of the trust after the section comes into force.

Breach of duty etc.

32

(1) This section applies where a trustee is in breach of a fiduciary duty—

(a) at the instigation or request of a beneficiary, or

(b) with the written consent of a beneficiary.

(2) The court may if it thinks fit make such order, assigning by way of indemnity all or part of the beneficiary’s interest in the trust property to the trustee or (as the case may be) to any person claiming through the trustee, as seems to the court to be just.

(3) This section applies—

(a) irrespective of when the trust was created, but

(b) only as respects a breach of a fiduciary duty occurring after the section comes into force.

Order relieving trustee of consequences of actings which are ultra vires

33

(1) This section applies where actings of a trustee are ultra vires.

(2) On the application of the trustee the court may, if the condition mentioned in subsection (3) is satisfied, make such order relieving the trustee of the consequences of those actings as seems to the court to be just.

(3) The condition is that the trustee believes (after taking all reasonable steps and making all reasonable enquiry) that it is within the trustee’s powers to act as the trustee does.

(4) Subsection (2) is without prejudice to any right of a beneficiary or trustee to recover trust property from a person, other than a trustee, to whom a payment would not have been made but for the actings in question.

(5) This section applies—

(a) irrespective of when the trust was created, but

(b) only as respects actings occurring after the section comes into force.

Provision purporting to limit liability for, or indemnify for, breach of fiduciary duty

34

(1) In so far as a provision of a trust deed purports generally to—

(a) limit any liability of a trustee for, or

(b) indemnify a trustee for,

the trustee’s breach of a fiduciary duty, the provision is of no effect.

(2) But subsection (1) is without prejudice to any provision of a trust deed which authorises a particular action or decision, or a particular class of actions or decisions, which but for that authority would constitute a breach of a fiduciary duty.

(3) This section applies—

(a) irrespective of when the trust was created, but

(b) only as respects a breach of a fiduciary duty occurring after the section comes into force.

Order relieving trustee of consequences of entering into a transaction in breach of fiduciary duty

35

(1) This section applies where a trustee has entered into, or proposes to enter into, a transaction in breach of a fiduciary duty.

(2) The court may, on the application of the trustee, if it thinks fit and if the conditions mentioned in subsection (3) are satisfied make such order, relieving the trustee of the consequences of breaching that duty, as seems to the court to be just.

(3) The conditions are—

(a) that the transaction has benefited, or is likely to benefit, both the trust property and (collectively) the beneficiaries, and

(b) that the terms of the transaction are at least as favourable to the trust property as those likely to have been, or to be, obtained in a comparable commercial transaction at arms-length.

(4) This section applies—

(a) irrespective of when the trust was created, but

(b) only as respects a transaction entered into, or to be entered into, after the section comes into force.

Personal liability of trustees

Trustees’ personal liability for beneficiary’s loss

36

(1) Except in so far as the trust deed, expressly or by implication, provides otherwise, a trustee only has personal liability for any loss to a beneficiary which results from—

(a) the trustee’s own acts or omissions, or

(b) a breach of trust, or of fiduciary duty, by a co-trustee if the trustee failed to take reasonable steps to ensure that the co-trustee did not commit the breach.

(2) This section applies—

(a) irrespective of when the trust was created, but

(b) only as respects—

(i) an act,

(ii) an omission, or

(iii) a breach of trust or of fiduciary duty,

occurring after the section comes into force.

(3) This section is subject to the other provisions of this Act concerning the personal liability of trustees (including, in particular, sections 39, 40 and 70).

Errors in distribution: circumstances in which trustee not personally liable

37

(1) A trustee is not personally liable for any error in the distribution of any property, or the income of property, vested in the trustee as trustee if—

(a) the error was caused by the trustee not knowing (either or both)—

(i) of the existence, or non-existence, of a person,

(ii) of a person's relationship, or lack of relationship, to another person, and

(b) the distribution takes place—

(i) in good faith and after such enquiries as any reasonable and prudent trustee would have made in the circumstances of the case, or

(ii) in accordance with an order of the court.

(2) Subsection (1) does not affect any right which a person entitled to the property or income concerned has to recover it from another person.

(3) Subsection (2) is without prejudice to section 24 of the Succession (Scotland) Act 2016.

(4) This section applies—

(a) irrespective of when the trust was created, but

(b) only as respects distributions occurring after the section comes into force.

Chapter 4 — Contractual rights, damages and the validity of certain transactions and documents

Contractual rights

38

(1) Subsection (2) applies where, acting intra vires, the trustees enter into an onerous contract with a person who, at the time the contract is entered into, is aware (whether or not by virtue of having been so informed by the trustees) that the trustees are entering into the contract in their capacity as trustees.

(2) Subject to subsections (3) and (4) and except in so far as the contract otherwise provides, any rights of the person under the contract are enforceable against the trust property only.

(3) Subsection (4) applies where—

(a) a person has a contractual right enforceable against the trustees’ private property, but

(b) the trustees have a right of relief against the trust property in respect of any finding against the trustees’ private property.

(4) The person may elect to enforce the right against the trustees’ private property or directly against the trust property (liability being joint and several).

(5) Subsection (6) applies where, acting ultra vires (and whether or not purporting to be acting intra vires), the trustees enter into an onerous contract with a person.

(6) Any rights of the person under the contract—

(a) are not enforceable against the trust property, but

(b) if the person enters into the contract in good faith, are enforceable against the trustees’ private property.

(7) This section applies—

(a) irrespective of when the trust was created, but

(b) only as respects a contract entered into after the section comes into force.

Damages

Damages for loss resulting from trustee’s act or omission in ordinary course of administration

39

(1) This section applies where—

(a) in consequence of a trustee’s act or omission (or of an act or omission of a person for whom the trustees are responsible) a person other than a trustee suffers loss, and

(b) that act or omission arises in the ordinary course of administering the trust.

(2) Subject to subsection (3), any damages awarded in respect of that loss are recoverable from the trust property only.

(3) In making any award in respect of that loss the court may, if satisfied that the act or omission was in any way attributable to the trustee’s failure to exercise such skill, care or diligence as is required of that trustee by section 31, determine that damages are recoverable, in whole or in part, from the trustee’s private property (to the extent of the trustee’s failure) and the balance (if any) from the trust property.

(4) This section applies—

(a) irrespective of when the trust was created, but

(b) only as respects an act or omission occurring after the section comes into force.

Bringing of action for damages for loss resulting from trustee’s act or omission in ordinary course of administration

40

(1) This section applies where—

(a) in consequence of the act or omission of a trustee (in this section referred to as “T”), a person other than a trustee suffers loss, and

(b) that act or omission arises in the ordinary course of administering the trust.

(2) Any action for damages in respect of that loss may be brought—

(a) against the body of trustees,

(b) on the basis of personal liability, against T, or

(3) At any time before final judgement in proceedings brought as mentioned in subsection (2)(a), the court may, under rules of court, allow the body of trustees an amendment—

(a) adding T, as an additional defender, to the instance of the principal writ, and

(b) directing existing or additional conclusions or craves, averments and pleas-in-law against T.

Delictual liability: trustee’s right of relief against other trustees

41

(1) Subsection (2) applies where a body of trustees incurs delictual liability but none of them incurs personal liability as respects the delict.

(2) Each trustee has a right of relief against the other trustees jointly and severally.

(3) Subsection (2) is subject to section 3(1) of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1940 (which provides for contributions to be in such proportions as are deemed just).

(4) This section applies—

(a) irrespective of when the trust was created, but

(b) only as respects liability incurred after the section comes into force.

Trustees’ liability in relation to certain obligations

42

(1) This section applies where a body of trustees incurs liability in respect of an obligation under—

(a) environmental law, or

(b) the law relating to an occupier’s ownership or control of heritable property,

being liability incurred in the ordinary course of administering the trust.

(2) Subject to subsection (3), any damages awarded in respect of that liability are recoverable from the trust property only.

(3) In making any award in respect of that liability the court may, if satisfied that the liability was in any way attributable to a trustee’s failure to exercise such skill, care or diligence as is required of that trustee by section 31, determine that damages are recoverable, in whole or in part, from the trustee’s private property (to the extent of the trustee’s failure) and the balance (if any) from the trust property.

(4) This section applies—

(a) irrespective of when the trust was created, but

(b) only as respects a liability incurred after the section comes into force.

Validity of certain transactions and documents

Validity of certain transactions entered into by trustees

43

(1) Subsection (2) applies where—

(a) the trustees enter into an onerous transaction with any person, and

(b) the transaction is one under which the trustees purport to exercise, in relation to the trust property, or to any part of the trust property, a power under section 15 (1) or 18 (1) whether the power derives from the trust deed or is implied by those sections.

(2) The validity of the transaction, and of any title acquired under the transaction by the second party, are not challengeable by that or any other person on the ground that—

(a) the exercise of the power is at variance with the terms or purposes of the trust, or

(b) on the part of the trustees, there has been some procedural irregularity or omission.

(3) Except that, if the trustees are acting under the supervision of the accountant of court and the exercise of the power is under section 15 (1), then subsection (2)(a) applies only if the accountant consents to the transaction.

(4) Nothing in subsections (1) to (3) affects any question of liability as between the trustees.

(5) This section applies—

(a) irrespective of when the trust was created, but

(b) only as respects a transaction entered into after the section comes into force.

Validity of certain deeds and other documents bearing to be executed by trustees

44

(1) Except in so far as the trust deed expressly provides otherwise, a deed, or other document, bearing to be executed by the body of trustees is valid if executed by a majority of the trustees of that body.

(2) Subsection (1) is without prejudice to section 22 (1)(b).

(3) This section applies—

(a) irrespective of when the trust was created, but

(b) only as respects a document executed after the section comes into force.

Chapter 5 — Duration of trust

Abolition of restrictions on accumulation and on creation of future interests

45

(1) Subject to any rule of law, a trust may be constituted of whatever duration the truster elects.

(2) The following (which relate to restrictions on the accumulation of income) are repealed in relation to a trust—

(a) the Accumulations Act 1892,

(b) section 5 of the Trusts (Scotland) Act 1961, and

(3) The following (which relate to restrictions on the creation of future interests) are repealed in relation to a trust—

(a) sections 47 to 49 of the Entail Amendment Act 1848,

(b) section 45 of the Conveyancing (Scotland) Act 1924, and

(4) The following rules of law do not apply in relation to a trust—

Reading this document does not replace reading the official text published on legislation.gov.uk. Contains public sector information licensed under the Open Government Licence v3.0. We assume no responsibility for any inaccuracies arising from the conversion of the original CLML XML to this format.

This text is published under legislation.gov.uk's own terms of reuse, not a Legalize or public-domain licence. legislation.gov.uk
Open Government Licence v3.0 (attribution required)
© Crown and database right. Derived from content available under the Open Government Licence v3.0 from legislation.gov.uk.