Law Commission’s Key Proposals for New Trusts Legislation

Author:Mr Dan Moore
Profession:Norris Ward McKinnon

Whilst the Law Commission is reviewing trust law, we've undertaken to keep you up-to-date with its recommendations; which is much easier than you having to read the 300+ pages of the Commission's report.

Core trust concepts

The Commission has recommended that new trust law will define the requirements for the creation of an express trust and a provision confirming no trust exists if the 'three certainties' are not present: the settlor's intention to create a trust, the beneficiary or beneficiaries, or permitted purpose, and the trust property.

Trustees' duties, restrictions on the use of exemption clauses and a default provision on the requirements of the duty to inform beneficiaries will be clearly set out.


Further to our article in Trust eSpeaking/15 Spring 2012, the Commission makes the following recommendations:

Giving trustees the same powers in relation to trust property that a trustee would have if the property was owned by the trustee absolutely Allowing trustees the power to determine what is income and capital for the purposes of distribution to allow them to invest assets without regard to whether the return is of an income or capital nature Providing Public Trust with a role to carry out official administrative procedures and to provide advice, including to issue vesting certificates, confirm the removal of an incapacitated trustee and to oversee the retirement and replacement of sole trustees Confirming that a trustee's indemnity cannot be limited or excluded by the trust deed Requiring companies, when acting as trustees, to clearly describe their status in all communications and contracts Making directors of companies acting as trustees directly liable for trust liabilities in some circumstances, and Requiring directors of a corporate acting as a trustee to have the same obligation to the beneficiaries as they would have had they, and not the company, been the trustees. Court powers and jurisdiction

The Commission has recommended:

Statutory restatement of the rule in Saunders v Vautier3 (where all the beneficiaries of a trust are adult and of sound mind can bring a trust to an end) regarding revocation and variation by beneficiaries, and the power of the court, following consideration of specified factors, to waive the requirement for consent of any person and approve a revocation, variation or...

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