14 years since a paper called Some Problems in the Law of Trusts was released a draft Trusts Bill has been released for consultation.
The draft Bill largely reflects the recommendations from the Law Commission’s review of trust law that commenced in 2009 culminating in a final report that was released in 2013.
The Bill has been introduced to address problems with current trust law such as:
- the complex nature of trust law (and that fact there is no one place to find it)
- the view that the Trustee Act 1956 is outdated, doesn’t reflect trust practice and is too narrow in scope
- the cost of trust administration
The new legislation is stated as being designed to enhance the current law, rather than introduce fundamental changes. In large part it is intended to restate existing law (from the Trustee Act 1956 and common law) in plain language.
The proposed reforms include:
- a description of the key features of a trust
- clear mandatory and default trustee duties (based on principles set down by the courts)
- requirements for trustees to manage and provide information to beneficiaries who have a reasonable likelihood of receiving trust property under the terms of the trust (qualifying beneficiaries)
- flexible trustee powers and updated rules about when trustees can authorise others to carry out certain trustee duties
- clear rules for variations and terminations of trust
- more options for removing and appointing trustees without needing to seek the assistance of the court
- preserving the ability to ask the courts to intervene to resolve problems or disputes.
For many trustees the biggest challenge to face if the draft Trusts Bill is enacted as legislation will be dealing with obligations to provide information to beneficiaries. For this reason it might be prudent for any trustees to review trust deeds in advance of the proposed new legislation to identify who the beneficiaries are and to review whether or not the classes of beneficiaries are appropriate.