Key changes to Trust Law in Scotland 

Trust law in Scotland is about to undergo its biggest reforms in more than a century. In December last year MSPs voted unanimously to pass the Trusts and Succession (Scotland) Bill which is aimed at modernising long-standing laws governing how trusts are operated. 

The Bill has now received Royal Ascent and it will come into force as law at the end of April 2024. 

Trusts play an important role in managing and protecting wealth and are a main feature of wills, particularly where there are young or vulnerable beneficiaries. 

The long-awaited reforms most notably affect the powers and duties of trustees, succession and a reform to prevent killers from acting as an executor on their victim’s estate. 

Here are some of the highlights of the Bill. 

Removal of executors who kill 

Those convicted of murder or culpable homicide can be prevented from acting as an executor in their victim’s estate. The court can remove someone convicted of murder or culpable homicide, or even those who are accused of murder from their previously nominated role of executor. This closes a key “loophole” in the law which allowed an executor to remain in charge of their victim’s estate.  

Removal of a trustee 

A trustee can be removed from their position by a majority of their co-trustees if they become incapable, or if they are convicted of an offence which involves dishonesty, imprisoned for an offence, contempt of court or failure to pay a fine. 

In the case of a professional trustee, their removal can be initiated by a majority of co-trustees if they lose membership in a regulated profession or are otherwise ineligible to practice. 

Trustees can also be dismissed if all the beneficiaries agree unanimously, providing they are of legal age, have full capacity, and have absolute entitlement to the trust assets. 

Recognition of Protectors 

In Scotland a protector is a person appointed to monitor and provide direction to the trustees in administering the trust. They are independent of the trustees. Until now, protectors have not been formally recognised under Scots law. This is an important change which aligns Scotland with other jurisdictions that recognise trusts. 

Changes to succession 

The surviving spouse or civil partner of a deceased person will now rank second to the free estate on intestacy, behind only children. This means that if a person dies without children surviving them, the surviving spouse or civil partner will inherit the whole net intestate estate.  

Disclosing information 

There has long been debate amongst practitioners as to what information should be provided by trustees to beneficiaries. The Act now imposes a duty to disclose information requested by the beneficiary in relation to the trust unless the trustees consider it inappropriate to do so. The beneficiaries may also seek a direction from the court if they do not consider the trustees have fulfilled this duty. 

New powers for trustees 

New powers are granted in relation to the appointment of new trustees. Trustees are given power to assume new trustees unless this is contrary to the terms of the trust deed. The settlor is also given power to appoint a new trustee where no capable trustee exists or is traceable.  

Inheritance rights for surviving spouse or civil partner 

Under the updated laws, the surviving spouse or civil partner of the deceased will now hold the second position in succession to the free estate on intestacy, following only children and grandchildren of the deceased. This revision ensures that if an individual passes away without surviving children, their surviving spouse or civil partner will inherit the entire estate. 

Intestacy cohabitant provisions 

Furthermore, the bill introduces modifications to the Family Law (Scotland) Act 2006 by extending the time frame for cohabitants to make a claim on intestacy from 6 months to 12 months. 

Trusts and succession can be a complicated business, so it’s always advisable to speak to a qualified expert to make sure you understand your rights and obligations.