Current projects

Trusts

Commissioner
Chairman

Team members
Mr Charles Garland, Project Manager
Miss Rebecca Reid, Legal Assistant

A wide-ranging review of trust law is being conducted. The current law is based to a large extent on the Trusts (Scotland) Act 1921 and late 19th century cases when the social and business background was different from that of today. An Advisory Group of practitioners and academics has been set up to assist the Commission. In order to make our task more manageable we have divided the work up into two broad areas, one examining the law relating to trustees and the other on the law governing trusts themselves. Within each of these areas we have identified a number of topics for consultation.

The first phase has concentrated on trustees. Three discussion papers have been published: Breach of Trust (DP 123, 2003), Apportionment of Trust Receipts and Outgoings (DP 124, 2003) and Trustees and Trust Administration (DP 126, 2004). Comments have been received on all these papers. The proposals in the third discussion paper on use of nominees and delegation in the investment field were widely supported and were implemented in the Charities and Trustee Investment (Scotland) Act 2005. That Act also implemented the Scottish recommendations about trustees' powers of investment in the earlier joint Report on Trustees' Powers and Duties (Scot Law Com No 172, Law Com No 260, 1999).

The Commission's Chairman, Lord Drummond Young, delivered a lecture on 'Trustees and trust administration: the Scottish Law Commission's proposals for reform' at the TrustBar seminar, Edinburgh, 12 February 2009.

The second phase of the review looks at trusts and four aspects have been studied so far. The first topic, variation and termination of trusts, deals with the variation and termination of private trusts by the beneficiaries or the court and the reorganization of charities, non-charity public trusts and endowments. A Discussion Paper, Variation and Termination of Trusts (DP 129) was published in 2005 and was followed by the Report on the Variation and Termination of Trusts (Scot Law Com No 206, 2007). The second topic examines the dual patrimony theory in the fields of trustees' ownership of trust property, their liability to third parties and insolvency; and when trusts come into effect as regards the trustees and the beneficiaries. A Discussion Paper, Nature and Constitution of Trusts (DP 133) was published in 2006. The third topic deals with various ways in which trustees may become liable to third parties for their actions. We examine contractual and delictual liability and liability for litigation expenses. Other areas of liability are also considered. A Discussion Paper, Liability of Trustees to Third Parties (DP 138) was published in 2008. The fourth topic concerns the rules restricting accumulation of income and successive liferents. Our discussion paper, Accumulation of Income and Lifetime of Private Trusts (DP 142) was published on 7 January 2010 and the consultation runs until 9 April 2010. Responses are invited, using the electronic response form if possible.

Our next task is to prepare a report on the topics which relate to trustees and their functions. This will contain draft legislation which will update the Trusts Acts.

For more information, please contact: charles.garland@scotlawcom.gov.uk

Page last updated: 7 January 2010