The Trust and Trustees Bill 2022 (the “Bill”) has recently undergone consultation in the Isle of Man, seeking feedback on proposed changes to modernise existing trust legislation. The Bill looks to provide 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 Bill would amend the Trustee Act 2001 and the Trustee Act 1961. The main changes to trust law proposed within the Bill include (in very brief summary):
- Disclosure of trust information: this seeks to provide 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 insertion seeks to facilitate a trustee contracting with himself when acting as a trustee of multiple trusts. This would align with the demands of modern trusts and industry practice;
- Liability of trustees to third parties: this insertion seeks to limit 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 amendment seeks to provide 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.
- Social, Ethical, Governance and Environmental considerations: trustees may, subject to the terms of the trust, have regard to social, ethical, governance and environmental matters including the views and values of a beneficiary in certain matters. In some instances, a trustee may apply to Court to modify a trust to permit assets to be invested in this regard where otherwise not permitted.
The above changes, if enacted, will see the Isle of Man’s trust legislation updated 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.
