What is the Trusts Bill?
Currently Trust law is made up of a combination of the Trustee Act 1956, the Perpetuities Act 1964 and a long series of case law. This means that it is not quick and easy for trustees to fully understand their duties and obligations.
Some of the Key changes include:
· Mandatory and default duties of trustees are clearly defined
· Provides guidance on when trustees are required to provide information to beneficiaries - including a presumption that Trustees must make basic trust information available to every beneficiary (such as the fact that they are a beneficiary)
· Changes the maximum life of a trust from 80 to 125 years
· More options for removing and appointing trustees (without having to go to court)
Highly relevant to people with existing trusts will be the clarification of mandatory trustee duties and the changes around information provided to beneficiaries – I have commented further on these below.
Mandatory Trustee Duties
These duties are absolutely mandatory and cannot be modified or excluded by the terms of the Trust. ALL trustees MUST:
· Know the terms of the trust
· Act in accordance with the terms of the trust
· Act honestly and in good faith
· Act for the benefit of the beneficiaries or to further the permitted purpose of the trust
· Exercise their powers for a proper purpose
Management and disclosure of trust information
Trustees can rely on one trustee to hold most of the information for the trust – however the bill sets out a requirement for each trustee to hold a copy of the trust deed and variations to the trust deed.
Disclosure of Trust information
Per the Bill there is also a presumption that trustees must notify beneficiaries of basic trust information. This basic information is defined as:
· The fact that they are a beneficiary
· The name and contact details of the trustees
· The occurrence of and details of each appointment, removal and retirement of a trustee as it occurs
· The right of the beneficiary to request a copy of the terms of the trust or trust information
This is to ensure that beneficiaries have sufficient information to enable the terms of the trust and the trustee’s duties to be enforced.
Deciding whether the presumption above applies
There are a number of factors trustees must consider when determining if the presumption above applies. These include:
· The settlor’s intentions
· The effect on the beneficiary, trustees, third parties and other beneficiaries of providing the information
· If the information is subject to personal or commercial confidentiality
· The practicality of providing the information
What does this mean for you?
Over the next 18 months trustees should ensure that:
- They have copies of the Trust Deed and variations
- They refresh or familiarise themselves on the terms of the trust
- Address the beneficiaries as listed in the trust deed; and consider if it is appropriate to make any changes to these
- They are ready to disclose basic information to the trust’s beneficiaries
Please contact one of the team or your legal advisor if you have further queries or concerns about the upcoming changes.