New consultation on trust law

We have published our Discussion Paper on Supplementary and Miscellaneous Issues relating to Trust Law (DP 148).

The basic statute regulating trusts in Scotland is the Trusts (Scotland) Act 1921.   That Act is now 90 years old, and it looks very dated in both style and substance.  Much of it is redolent of an age when trusts were used to hold landed estates or, through the marriage contract trust, to deal with weaknesses in the law relating to the property of married women.  Today, while trusts of that nature can be encountered, it is much more common to find trusts used for the purposes of tax and estate planning or to regulate a family's business interests or for commercial purposes.  The use of trusts for commercial purposes can take many forms, including investment vehicles, pension trusts, securitisation trusts and many others.  Those changes have not been reflected in Scottish trusts legislation. 

The Commission has been giving consideration to aspects of the law of trusts for some time.  Since 2003 we have issued seven Discussion Papers - with the present one being the eighth - and one Report (on the variation and termination of trusts, which was published in 2007).  We have begun work on a Report and a draft Trusts (Scotland) Bill which will cover the majority of areas on which we have consulted.  Whilst working on that, however, we have become aware of the desirability for some further consultation, and this has given rise to the current paper.

Our new Discussion Paper is divided into three parts.  The first gives a brief resume of the stage the project has reached and asks whether there is support for having a comprehensive statutory statement of trust law in Scotland, as exists in, for example, Jersey and a number of other leading trust law jurisdictions.  The second part revisits some of the topics which have been covered in earlier Discussion Papers but on which we consider that there is a need for further views (for instance because, in the intervening period, the relevant legislation has been amended or because the Commission has changed its view to some extent on certain matters).  In the third part we seek views on new topics, such as whether the range of trusts which can be set up might be expanded in order to bring Scots law into line with the laws of many of the world's leading trust law jurisdictions.  We have drawn, for example, on work currently being undertaken by the New Zealand Law Commission and also on certain types of trust to be found in the Cayman Islands (STAR trusts) and in the British Virgin Islands (VISTA trusts).  We seek views on whether these or other types of trust might be usefully incorporated into Scots law.  We also ask for views on the law regarding beneficiaries' rights to information about the trust and about whether there is demand in Scots law for what is known as the Hastings-Bass principle or something like it.  This principle allows trustees' decisions to be reduced in certain types of situation if they were taken in error.

Our consultation period runs until 1 July 2011 and information about how to respond to some or all of the proposals and questions can be found on the Trusts project page.