The Trusts Act 2019 and What it Means for You
The much anticipated Trusts Bill finally received Royal Assent on 30 July 2019. The majority of the (now) Trusts Act 2019 will come into force on 30 January 2021. It marks the most significant change in the area of trust law in 60 years.
The main objectives of the Act are to set out core trust principles, to provide for default administrative rules, to provide for mechanisms to resolve trust-related disputes and to make the law of trusts more accessible.
Key aspects of the new Act include:
Mandatory and Default Trustee Duties
The Act records five mandatory duties which cannot be modified or excluded by the trust deed being duties to:
- The Act also records a number of default duties. If a trust deed does not vary or exclude the default duties, then those duties will automatically apply.know the terms of the trust;
- act in accordance with the terms of the trust;
- act honestly and in good faith;
- act for the benefit of the beneficiaries or to further the permitted purpose of a trust;
- exercise powers for a proper purpose.
Those setting up new trusts will therefore need to consider whether they wish to vary or exclude any of the default duties. Trustees of existing trusts will also need to consider how the mandatory and default duties will affect their ongoing responsibilities.
Obligations to Provide Information to Beneficiaries
The Act contains a presumption that beneficiaries will be notified of certain basic trust information, and a presumption that other trust information will be provided to beneficiaries upon request. Trustees may only refuse to provide information after giving consideration to a number of factors as are set out in the Act (for example, the age and circumstances of the beneficiary, and whether the information is subject to personal or commercial confidentiality).
Documents to be Kept by Trustees
The Act records a number of core documents that must be kept by trustees, such as the trust deed, variations to the trust deed, records of trustee decisions, any written contracts and any accounting records and financial statements. Again, these obligations will apply to both new and existing trusts.
Extending the Maximum Duration of a Trust
The Act repeals the Perpetuities Act 1964 which generally limits the duration of a trust to 80 years. Trusts will now be able to continue for up to 125 years.
Trustees of existing trusts should now take the opportunity to review the operation of those existing trusts and consider their obligations under the new Act. Similarly, those setting up new trusts will need to give careful consideration to their obligations and the content of any new trust deed.
If you have any questions about what the Act means for you, please do not hesitate to get in touch with our team.