The Trusts and Succession (Scotland) Bill, which aims to modernise the law and also improve how it is understood ended Stage 3 on 20th December 2023.
Owing to how the significant amendments to the Trusts (Scotland) Act 1921 (the main source of legislation in this area), it has now become incredibly complicated and difficult for people to interpret and understand.
Trusts have been in use since at least the early 17th century in Scotland and various changes have occurred in that time, alongside changes to societal norms and traditions, which have an impact on trusts and successions.
At present, there is a little doubt on how the existing law on succession (and special destinations) should be interpreted. The Bill aims to clarify the existing law. Likewise, the Bill also aims to modernise the order in which people inherit, given the changes in how society understands families and the various relationships held within them.
This Bill is split into two parts.
Part 1 of the Bill deals with trusts.
The Bill clarifies:
- what kind of investments can be made by a trustee
- a trustee’s duty of care in relation to their role
- whether a person can be a trustee or not
- how someone would stop being a trustee by resigning or being removed
- what type of information a trustee must provide to other people (including to beneficiaries – the people who will benefit from the trust ) and how often
- the management of private purpose trusts.
The Bill clarifies the information a beneficiary must be given and how their views should be considered (and caters for where there is more than one beneficiary, like a whole family or defined group of people). The Bill also clarifies the role the court must take in terms of representing a beneficiary under the age of 18.
Part 2 of the Bill deals with succession.
Section 71 clarifies the law in relation to special destinations. A special destination is a condition that often applies when people (usually spouses) buy property jointly. The Bill clarifies that if, under these circumstances, the people were married, but later divorced, the property is not automatically inherited by the ex-partner.
Section 72 reorders who inherits property when someone dies without leaving a will. At the moment, spouses and children are entitled to a specific share of the property whether or not a person has left a will (these are called prior and legal rights). If there is no will, there is then a list to show who any remaining property will go to. Children and grandchildren are first on that list, followed by parents and siblings and then a spouse.
The Bill proposes to list spouse after children and grandchildren. This would mean that if someone died without a will, leaving behind a spouse, but no children or grandchildren, the spouse would inherit everything. But if the deceased person had any children or grandchildren, they would inherit any property left after the share identified under legal and prior rights.