Trusts and Succession (Scotland) Bill: equality impact assessment

Screening

Policy Aim

The Bill implements the recommendations of the Scottish Law Commission's Report on Trust Law, published in 2014, and one substantive provision on the Scots law of intestate succession. In general, it covers the powers and duties of trustees, the powers of the courts in trust matters, and miscellaneous other issues in trust law.

The one substantive provision on the Scots law of intestate succession implements a recommendation from the SLC's Report on Succession (2009) and was consulted on by the Scottish Government in 2015. The law on intestate succession provides a default position in cases where an individual dies without leaving a will. A statutory scheme for intestacy provides a default set of rules about what should happen to someone's estate when they die without a will. The substantive provision of succession law in this Bill will amend the order of intestate succession so that a surviving spouse/civil partner's entitlement to the whole of the net intestate estate will rank second in line behind any surviving children of the deceased; this change reflects the contemporary perception of a spouse or civil partner as a key member of the deceased's family.

A significant number of the recommendations deal with the powers and duties of trustees. The Trusts (Scotland) Act 1921 ("the 1921 Act") sets out a number of statutory powers and duties of trustees that form part of every trust unless the contrary is provided for in the trust deed.

Most of the current statutory law relating to trusts is found in the 1921 Act. Not only is its structure and wording old-fashioned, it has been heavily amended so that it is not easy for trusters, trustees or beneficiaries to understand what their legal rights and duties are. In modern trust practice, the powers and duties of trustees are markedly different from those in the 1921 Act. The Bill, therefore, will bring the powers and duties laid out in statute more into line with modern practice.

The overall policy aim of the Bill is to ensure that the Scots law of trusts is clear and coherent and able to respond appropriately to modern conditions. This will be achieved by bringing together existing trusts legislation into a single statute, reforming and updating it into modern statutory language.

The opportunity is used to clarify a number of trust issues, making clear that certain trust structures are permitted under Scots law. For instance, that a trust can be set up which serves a purpose (for example, the maintenance of a bench in the public space) rather than a specified person. Other examples include the appointment of a supervisor or protector.

Many of the provisions found in the Bill are default provisions; that is, they apply in the absence of any contrary provision in the trust deed. Legislation governing trusts invariably contains a large number of such provisions; that is true of the 1921 Act, and also of legislation found in other jurisdictions. In selecting default rules, a policy of adopting current best practice has been pursued.

The proposals in the Bill are in line with two of the Scottish Government's National Outcomes,^[1] which form part of the Scottish Government's National Performance Framework.^[2] They are:

• "We recognise that a strong, competitive economy is essential to supporting jobs, incomes and our quality of life":^[3] As outlined above, the Bill will modernise the law of trusts in Scotland. The benefits of the Bill will be shared throughout Scotland, providing clarity for both traditional family trusts and complex commercial trusts.
• "Investing in the skills and creativity of our workforce, protecting workers rights and providing decent working conditions is the right thing to do. It also makes our economy more stable, productive and efficient":^[4] Implementation of the Bill will secure and develop the already thriving trust industry which exists in Scotland. This is likely to create an increased demand for trust-related professionals.

Who will it affect?

The Bill will affect those who choose to set up or administer a trust, or are the beneficiaries under a trust. A trust can provide a number of benefits that can be of help in protecting vulnerable individuals. For example, a parent may wish to place their family home in trust for the benefit of a disabled child, with the home eventually passing to their other children. For those not wishing to be involved with a trust, there are a range of other legal devices which may be considered and which remain unaffected by this Bill.

The legal profession and their clients will be directly affected as the majority of trusts are drafted by solicitors. It is important to appreciate, though, that the proposed reforms will benefit not only business or legal sectors. The reforms will also help anyone in the running of private trusts and they will assist executors in winding up the estates of deceased persons. Charities and other public trusts will also benefit from the modernisation of the law.

The Scots law of trusts is badly outdated. As well as reforming the law, the Bill will bring together trust legislation into a single, coherent statute drafted in modern form to meet modern conditions in Scotland.

As regards the succession provision in the Bill, those affected will be those who die intestate, their surviving spouses (who would inherit the net intestate estate) and siblings (who would no longer inherit the net intestate estate).

What might prevent the desired outcomes being achieved?

The desired outcomes would not be achieved if the Scottish Parliament did not pass the Bill or if it was amended in a way that would not achieve the intended modernisation of the law.