Scotland’s trust law is over 100 years old and is to be updated to bring it in line with modern practices.

The Trust and Succession (Scotland) Bill is currently working its way through the Scottish Parliament. There are 3 stages towards turning a bill into an Act:

1. Introduction – the bill is proposed and consultation takes place; Parliament then decides if the Bill is to be rejected or can proceed to stage 2.
2. Amendments – where proposed amendments are debated and provided by MSPs with committee members having the say on what (if any) amendments ae made. If amendments are made, then a new version of the bill is created and the bill will proceed to stage 3;
3. Further amendments, debates and final vote – further amendments can be made and a vote is cast to pass the bill into law. If this happens, the bill will be sent for Royal Assent. Once Royal Assent is granted, the Bill will become an Act and therefore law.
4. The new proposed Bill was approved by the Scottish Parliament for progression to stage 2 on 25 September 2023.

The Bill is in two parts as follows:

1. Trusts – this will update trust law and how they are administered and managed,
2. Succession – this will seek to change Scottish intestacy law (where someone has died without a Will) and who has the right to inherit and in what order.

Trusts

The main aims of the amendments to Trust laws are to more clearly define the responsibilities of a Trustee and the rights of beneficiaries. Currently, beneficiaries can become frustrated by the actions of a Trustee but find it difficult to obtain the information they feel they are entitled to or to have a Trustee removed from office.

Issues can arise in Trust administration when some family members are Trustees and other beneficiaries (also family members) do not trust or get along with the Trustee(s). They may feel there is a conflict of interest or naturally disposed to distrust the Trustee(s). 

Often beneficiaries can feel a Trustee is being deliberately obstructive, when that is not in fact the case. A Trustee has a responsibility in relation to confidentiality not to share more information than is necessary.

The new Bill shall make it easier for:

1. Trustees to understand what they can and cannot do and what information they must provide to beneficiaries; and
2. Beneficiaries to understand the role of the Trustee(s) and their responsibilities to them (the beneficiary), together with an understanding of their rights, which will now include a more clearly defined path to having a Trustee removed from office, if it can be proven said Trustee is acting improperly.

Succession

When a person dies without a Will in place he/she dies ‘intestate’ and the intestate succession laws of Scotland are followed. Currently, the law provides that the surviving spouse/civil partner can claim prior rights and legal rights, the surviving children can claim legal rights and if there is any estate left over once these have been dealt with, there is an order of preference for what is known as ‘the net free estate’.

The new Bill seeks to change the order of preference for the inheritance of the net free estate by improving the position for a surviving spouse/civil partner.

The new Bill also seeks to change how the use of a survivorship clause in a title to heritable property is dealt with. Where a deceased person and their former spouse/civil partner owned a property jointly with survivorship clause in the deeds and title was not changed before the deceased died, the current law provides the survivor will automatically inherit the deceased’s share of the house. The new Bill seeks to change this to remove the automatic survivorship clause if the parties were divorced prior to the deceased’s death.

The priority for reform is the update to Trust law, rather than succession law, but it remains to be seen what will be changed.

Please contact us if you require any advice on trusts, succession or executry administration.