Trusts and Succession (Scotland) Act 2024 Update

The Trusts and Succession (Scotland) Act 2024 (the “Act”) received Royal Assent on 30th January 2024 and it represents the most significant legislative update to Scots trust law in over a century. It aims to bring clarity and coherence to Scots trust law, ensuring it can respond appropriately to modern conditions.

The introduction of the Act will be of interest to trustees of charitable trusts, and those trustees need to be aware of the impending changes and how they will affect them.

Standard of care

All charity trustees in Scotland are required to comply with the standard of care set out in section 66 of the Charities and Trustee Investment (Scotland) Act 2005. That is to say that trustees must “act with the care and diligence that it is reasonable to expect of a person who is managing the affairs of another person”.

A similar provision has been introduced in the new Act, however, charity trustees should familiarise themself with the requirements imposed on ‘professional trustees’. The Act introduces a higher standard of care for trustees who provide professional services about the management of the trust, or where they have professional qualifications and are appointed as a trustee on that basis. Even if the trustees do not provide professional services to the charity, they will be expected to act with the care reasonably expected of a member within that profession.

While this will raise the standard of care imposed on some trustees of a charitable trust, it is moving closer to the position that has been long established for directors of companies. From a practical point of view, the changes should not raise any concerns for trustees, but we would recommend that all trustees appraise themselves of their duties as part of their regular training.

Trustees’ decisions

Charity trustees will be familiar with the importance of establishing a quorum to validly pass decisions. Typically, this will be set out in the trust deed and is likely to either be a majority of the trustees in office or some other fixed number of trustees.

The Act amends this by providing that decisions can be made by a majority of the trustees “for the time being able to make it”. This provision allows the trustees to effectively reduce the quorum to the number of trustees who can act at that time. This will hopefully allow for a more effective management of trusts where one or more trustees have lost capacity, cannot be traced, or are impacted by an unavoidable conflict of interest.

Appointment and removal of trustees

Charity trustees must take steps to ensure that a breach of a trustee’s legal duties is not repeated and in circumstances where a trustee has been in serious or persistent breach of their duties, the other trustees have a duty to remove them from office. It is not uncommon for many older trust deeds to be silent on this matter which can leave charity trustees in a difficult position. The trustees may have a duty to remove an individual, however, the trust deed may not contain the requisite powers to do so.

The Act will introduce new powers which will enable a trustee to be removed from office by a majority of their co-trustees where they are incapable, convicted of an offence which involves dishonesty, or imprisoned for an offence, contempt of court or failure to pay a fine. While the powers have been widened marginally, they do not go as far as allowing a charity to remove an individual who is in serious or persistent breach of their duties as a charity trustee.

Many of the provisions of the Act are still to come into force and one of those relates to the power to appoint new trustees. Subject to the terms of the trust deed, the current trustees will have the power to appoint a new trustee. This will serve to help some smaller charitable trusts whose activities have come to a halt as there was no power to appoint new trustees.

While charity trustees may immediately be drawn to the new standard of care, trustees of charitable trusts need to understand the new powers as they may provide a helping hand in the management of the administration of the charity in the future. We will be providing further commentary as the remaining provisions of the Act come into force.