The Trusts and Trustees Act 2023 (the “Act”) was announced to Tynwald and received Royal Assent on 18 July 2023, with sections 1 and 2 of the Act already being in force and the remainder due to be effected by Appointed Day Order on 1 December 2023. The Act sees a number of changes modernising existing trust legislation. The Act provides clarity and certainty to both trust users and practitioners, as well as modernising legislation to meet the requirements of modern-day trusts.
Along with implementing new trust legislation, the Act amends the Trustee Act 2001 and the Trustee Act 1961. The main changes to trust law under the Act include (in very brief summary):
- Disclosure of trust information: this provides clarity as to who may apply for trust information and circumstances in which a trustee may refuse to provide the same, and will solidify the position as set out in the case of Schmidt v Rosewood;
- Power of trustee to contract with himself: this facilitates a trustee contracting with himself when acting as a trustee of multiple trusts. This aligns with the demands of modern trusts and industry practice;
- Liability of trustees to third parties: this limits trustee liability to the trust fund in transactions with third parties, where that third party is informed in writing that the trustee is transacting in that capacity;
- Power to declare exercise of a power voidable: this provides a power to the Court to declare void a transfer or disposition where the trustee has failed to consider relevant factors when exercising his power, and but for that failure, the trustee would not have exercised that power in that way; and
- Amendment to the Limitation Act 1984: reducing the limitation period in which a beneficiary can bring a claim for breach of trust from six years to three years.
The above changes update the Isle of Man’s trust legislation to satisfy the demands of modern trusts, stimulate competition within the Isle of Man’s trust industry and create a more accurate reflection of common practice.
Our Private Client & Trusts Team have extensive knowledge on all matters associated with trusts. If you require any further information or would like to make an appointment to meet with one of the team, please contact us.
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