Are you a trustee of a Trust?
The Trusts Act 2019 (Act) received Royal Assent on 30 July 2019 and will replace the Trustee Act 1956 and the Perpetuities Act 1964 effective from 30 January 2021. The changes are significant and if you have a family trust or are a trustee of a family trust, you should be aware of the changes and seek advice where appropriate. We set out some key changes below:
Disclosure of information to beneficiaries
Trustees will have a duty to write to beneficiaries advising them they are beneficiaries of the trust and that they are entitled to request further trust information and documents. This will increase the likelihood that beneficiaries will seek detailed information from trustees. Considering this disclosure requirement settlors may wish to review the list of persons who are discretionary beneficiaries of a trust and remove any discretionary beneficiaries who are unlikely receive distributions from the trust.
New record keeping requirements
Trustees will be required to keep core trust documents for the duration of the trustee’s trusteeship and must pass on the documents to replacement trustees to ensure trust records are retained for the lifetime of the trust. Trustees should review their trust records to ensure they will be compliant with the Act.
Trustees will be prevented from claiming indemnity under the trust deed should they operate the trust in a manner that is grossly negligent. Accordingly, trustees will need to take more care when administering trusts, including spending more time and effort to accurately document trust transactions.
The life of a trust is currently limited by the common law rule known as the rule against perpetuities to 80 years. The Act abolishes this rule and extends the maximum duration of a trust to 125 years. The effect of this change is that family trusts will be able to continue for longer and used as a succession planning vehicle for more generations. Trust deeds will need to be amended to extend their duration if this change is to be taken advantage of.
Please get in touch with DNA or your solicitor if you wish to discuss what effects these changes will have on your trust.