- Just before Christmas MSPs unanimously passed the Trusts and Succession (Scotland) Bill which became an Act this month although much of it is not yet in force.
- Most of the Act concerns long-awaited modernisation and improvements to trust law rather than any extensive changes to succession law. So although “Succession” appears in the title of the Act only two sections of the Act (out of a total of 89) directly concern succession law.
- This note does not provide an overview of the Act. It simply touches on (i) a useful change concerning “incapable” trustees and (ii) the main change to succession law.
Problems and solutions where there is an “incapable” trustee
A potential difficulty under the pre-2024 Act law
- The general rule was – and still is under the 2024 Act – that where there are three or more trustees a decision may be made by a majority of them.
- But where there are only two trustees a decision must be made by them jointly because if there are only two trustees there can be no “majority”.
- This could be problematic in certain cases before the 2024 Act because if a trustee became “incapable” of acting as a trustee that did not mean his or her office as trustee automatically came to an end. Instead, he or she continued to count as a trustee even if not actually capable of acting as such.
- This could prove a difficulty because the incapable trustee still counted as a trustee so that the other sole “capable” trustee could not act alone and nor could the two act jointly where one was incapable. So trust business could become stuck.
- (There was scope under the pre-2024 law to apply to the court to have an “incapable” trustee removed from office but that involved delay and expense.)
Solutions under the 2024 Act
- Under the 2024 Act it remains the case that if a trustee becomes “incapable” that does not automatically mean that he or she ceases to be a trustee. But the 2024 Act offers certain solutions.
- In particular:
First, the “capable” trustee may remove the “incapable” trustee from office.
Secondly, an “incapable” trustee is disregarded when it comes to making decisions on trust business so that where there are two trustees one of whom is “incapable” the capable trustee may make a valid decision on his or her own.
Thirdly, if the “incapable” trustee has a guardian or attorney (under the Adults with Incapacity (Scotland) Act 2000) then the guardian or attorney may resign office as trustee on behalf of the “incapable” trustee.
Three particular related points
- First, like many provisions of the 2024 Act the provisions regarding decision-making by the trustees apply “except insofar as the trust deed, expressly or by implication provides otherwise”.
- Secondly, whilst the 2024 Act has got “Royal Assent” most of its provisions are not yet in force.
- “Incapable” is defined in the 2024 Act by reference to the Adults with Incapacity (Scotland) Act 2000.
The main succession or inheritance law change in the 2024 Act
- If someone dies without leaving a valid will the law of “intestacy” prescribes who gets what.
- If there is a surviving spouse or civil partner they are first and foremost entitled to “prior rights” and to “legal rights” shared along with any children of the deceased.
- Subject to that, before the 2024 Act, children, parents and siblings all took priority over a surviving spouse or civil partner as regards the remaining “intestate” estate.
- But, now under the 2024 Act, if someone dies without any surviving children (or remoter descendants) a surviving spouse or civil partner takes precedence over parents and siblings.
Note: This material is for information purposes only and does not constitute any form of advice or recommendation by us. You should not rely upon it in making any decisions or taking or refraining from taking any action. If you would like us to advise you on any of the matters covered in this material, please contact Jocelyn Gilda: email JLG@mitchells-roberton.co.uk