The long-awaited Trusts Act 2019 (Act) has arrived! The Act aims to update trust law and make the law accessible to all (not just lawyers).
The Act came into force on 30 January 2021, and applies to all existing written trusts, as well as any new written trusts established. If you are a trustee of a trust, or are considering becoming one, we summarise the matters that you need to consider below.
Mandatory duties (cannot be “contracted out” of within the terms of the trust deed)
A trustee must:
Know the terms of the trust;
Act in accordance with the terms of the trust;
Act honestly and in good faith; and
Hold/deal with property and act for the benefit of the beneficiaries, or to further the permitted purpose of the trust, in accordance with the terms of the trust.
There are other mandatory duties to be aware of, including retention of core documents, keeping beneficiaries informed and making information available to beneficiaries on request.
Default duties (can be “contracted out” of within the terms of the trust deed)
A trustee must:
Exercise the care and skill that is reasonable in the circumstances having regard to any special knowledge or experience that the trustee has or would reasonably be expected of the trustee in light of their course of business or profession;
Exercise care and skill that a prudent person in business would exercise in managing affairs – also known as a duty to invest prudently (having regard to any special skill and experience that the trustee may have or would reasonably be expected to have);
Not exercise a power of a trust either directly or indirectly for their own benefit;
Consider actively and regularly whether the trustee should be exercising the trustees powers;
Not bind or commit trustees to future exercise or non-exercise of a discretion;
Avoid a conflict of interest between a trustee’s interests and the interests of the beneficiaries;
Act impartially to beneficiaries and not be unfairly partial to any beneficiary or group of beneficiaries;
Not make a profit from the trusteeship of the trust
Not make any reward for acting as trustee, but this does not affect the ability to be reimbursed for legitimate expenses and disbursements; and
Act unanimously (if more than one trustee).
A key area for consideration is that of default duties – should they apply, should they be excluded in full or in part, how this will affect the beneficiaries to be able to hold the trustees to account for future decisions.
At Foundation Legal, we can advise you on how the Act will impact you and help you through this process to prepare you and your trusts for the new regime.