The Efficacy of Scotland’s New Trusts and Succession Act, One Year On
Published bySarah-Jane Macdonald
THE WORK GOES ON
Sarah-Jane Macdonald TEP and Roddy Harrison TEP assess the efficacy of Scotland’s new trusts and succession act, one year on
What is the issue?
The Trust and Succession (Scotland) Act 2024 (the Act) received Royal Assent in January 2024.
What does it mean for me?
After decades of consultation, and various calls on the Scottish Government to progress reform, trust and estate practitioners celebrated its arrival.
What can I take away?
One year on and many practitioners may feel deflated as the wait continues for the majority of the Act to be brought into force. Nevertheless, this is an opportunity to reflect on what progress has been achieved and what the future holds.
The long-awaited Trust and Succession (Scotland) Act 2024 (the Act) received Royal Assent on 30 January 2024. After decades of consultation, and various calls on the Scottish Government to progress reform, trust and estate practitioners were finally able to celebrate the Act’s arrival.
Succession law – where are we?
Although billed as both trust and succession legislation, the Act primarily focuses on reforming trust law. Despite this, the major progress in the past year has related to the Act’s few sections that update succession law.
The relevant sections reflect the handful of recommendations that emerged from the 2019 consultation on succession reform (the Consultation)1, which:
• amend the law of intestacy to allow a spouse or civil partner to inherit the whole estate if there are no children2;
• extend the time limit for claims to be brought by cohabitants from six to 12 months3; and
• provide a legislative basis to remove executors nominate (testate estates) or prevent the appointment of executors dative (intestate estates) where that person is being prosecuted for or has been convicted of the murder or culpable homicide (i.e., manslaughter) of the deceased4.
Section 77 of the new Act was the first substantive piece of reform to come into force on 30 April, which applies to deaths on or after 1 May 2024. It was largely uncontroversial when first proposed during the Consultation, as it was suggested the public already assumed that a spouse or civil partner would inherit the whole estate on the death of their significant other.
During the legislative process, questions were raised by the Scottish Government as to whether wording ought to be included to restrict this where spouses or civil partners had separated. The consensus was that further consultation would be required as to how this would be determined in practice, so was not included in the final version of the Act.
An unintended consequence of the legislation is that it has also increased what cohabitants could potentially claim under s.29 of the Family Law (Scotland) Act 2006 (the 2006 Act). The wording of that legislation limits claims to no more than a spouse or civil partner could inherit, rather than specific reference to what cohabitants could achieve. There have been no reported cases yet, but practitioners should now be alive to the risks in dealing with intestate estates where cohabitants have a potential claim.
The time limit (under s.78 of the Act) has not yet been brought into force, so such claims continue to have a six-month deadline. That said, s.78 does not include a statement as to when the deadline will take effect. If it is simply enacted without further stipulation it will amend the 2006 Act, such that claims can be made within 12 months of the date of death; however, this could have the result that claims that would otherwise have prescribed (i.e., because more than six months, but less than 12 months, have elapsed) could revive. It is anticipated that this loophole will be closed when regulations enacting this section are introduced. For the time being, practitioners are in a limbo where claims beyond six months could potentially be made, and care must be taken in those scenarios.
The final point was brought in following public objections and media attention after a family found themselves in that situation. The Trusts and Succession (Scotland) Act 2024 (Commencement No. 1) Regulations 2024 (the Regulations) brought ss.8 and 80 of the Act into force in relation to this issue, as of 26 June 2024. Arguably, however, the law has not moved much beyond the pre-2024 position, as it still requires a court action to seek the removal of such an executor in testate cases. This could, of course, be defended, leaving families in no better a position than that prescribed by the current law. That said, there is some progress in relation to intestacy cases where a Sheriff5 can simply refuse a petition now.
One part that causes some concern is that s.8 states an executor could be removed if they have ‘otherwise been involved (or being suspected of having otherwise been involved) in the death’. With assisted dying in the headlines and strong views on the subject, this opens the possibility of parties raising litigation under this section. The recent English and Welsh case of Morris v Morris could be followed6, but there have been no reported cases as yet.
Outside of those sections, succession law is still crying out for a thorough review. 2024 marked the 60th anniversary of the Succession (Scotland) Act 1964 and practitioners still await the further consultation promised after the Consultation closed.
Trust law: where are we?
The Regulations brought into force one main provision of the Act: the ability for co-trustees to a remove a professional trustee under s.9. Other sections were enforced but only to the extent required to give effect to this provision.
On the one hand, it appears that not much has moved in the past year, but this provision will potentially resolve a significant issue for Scottish trusts.
The conditions under s.9 to satisfy removal are that the trustee concerned must:
• have been appointed as a member of the profession to provide professional services in the management of the trust; and
• no longer be a member of that profession.
The trustee must first be given ‘adequate’ notice of the decision to remove7 and have the ‘opportunity to express an opinion’ before the decision is taken. There is no guidance on what would constitute either adequate notice or such an opportunity for opinions, as yet. The removal must also be intimated to the removed party ‘as soon as reasonably practicable’ after it is completed8. The power to remove also applies to a protector with power to remove trustees.
A majority of the other trustees is required. If only two trustees are appointed, the sole remaining trustee (assuming they have capacity) could remove a co-trustee.
This will assist where a retired professional remains on a trust where the other trustees no longer require them or where they are impeding trust decisions by not engaging or refusing to resign. However, if, for example, a trustee was appointed as a family member but was also a professional, the combination of retirement as a professional and a family dispute could result in their removal. Likewise, there are often situations where an independent third party was appointed to specifically ensure a family member was not acting alone.
This could give rise to new case law. There is no ability to challenge the decision to remove within the Act. It is also debatable whether an aggrieved trustee would have any locus to sue in these scenarios, even if there is genuine concern as to the future of the trust fund, as they no longer have an ‘interest’ in the trust.
There is no equivalent within the legislation for trust corporations. The Act also does not apply to non-practising professionals who retain their professional status. Section 9(2) to (4) may therefore have very limited use.
The issue it will resolve, as indicated, is perhaps in relation to family protection trusts, where the appointment of professionals has been common. Firms are now utilising this section to remove former solicitors without the requirement to provide them with a discharge. However, removal using s.9 will only be available if there are other capable trustees to complete the removal.
Unlike the Trusts (Scotland) Act 1921 Act, there is no statutory format of documents. Practice is growing to develop these.
What lies ahead?
There do not appear to be any obstacles that would prohibit a single enactment date for the remaining provisions and it is unclear why those provisions have been postponed. It is hoped that it will be brought into force soon and that a further annual review will not precede it.
In the meantime, practice and case law can perhaps develop on the sections now in force, and practitioners may soon see solutions (or other issues) thanks to these sections.
The question, however, remains: when will succession reform form part of the Scottish government’s agenda?
1Law of Succession: consultation [https://www.gov.scot/publications/consultation-law-succession/]
2Section 77 of the Act
3Section 78 of the Act
4Sections 8 and 80 of the Act
5A legally qualified judge
62024 EWHC 2554 Ch
7Section 13 of the Act
8Section 9(7) of the Act
This article first appeared in the STEP Journal
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