Part 1 – Trusts
7.Part 1 of the Act makes provision in relation to the following aspects of trust law:
appointment, assumption, resignation, removal and discharge of trustees,
decision-making by trustees,
powers and duties of trustees,
contractual rights, damages and the validity of certain transactions and documents,
duration of trusts,
private purpose trusts,
protectors, and
powers of the court.
8.The trusts provisions of the Act implement the recommendations contained in the Report on Trust Law published by the Scottish Law Commission(1) (“Report on Trust Law”). Any references in these Explanatory Notes to a recommendation are to a recommendation set out in the Report on Trust Law, unless otherwise indicated.
9.The Act provisions on trusts replace all existing general trusts legislation, other than that dealing specifically with charitable and / or public trusts or other specific forms of trust such as trust deeds for creditors. Charitable trusts are also governed by charity law in the Charities and Trustee Investment (Scotland) Act 2005, though provisions in the Act cover general aspects of trust law that apply equally to public and charitable trusts and to private trusts; so to that extent the Act may be relevant to charitable, public and other specific forms of trusts. In places specific provision is made in the Act for the application of its provisions. On the interaction with charity law, a charitable trustee for a charity which takes the legal form of a trust will need to be aware both of the Scots law of trusts and Scots charity law. For instance, charities legislation sets out standards of care expected of a charity trustee, while the Act sets out statutory powers of a trustee. If there is an apparent conflict between two statutory provisions — for example, where one provision is a general statement on trust law and the other is a specific provision on charity law — the courts may apply the more specific provision.
10.While the Act replaces existing trust legislation, it does not provide a comprehensive statutory statement of trust law in Scotland. The Scots common law of trusts, where it is not altered by provision made in the Act, will remain operative and will apply alongside the Act provisions.(2)
Default provisions
11.Many of the trusts provisions in the Act are default provisions, meaning that they will apply to all trusts other than those where alternative arrangements are in place. Such alternative arrangements may be set out expressly in the trust deed, but they may also be implied from the terms of the trust deed. In either case, the alternative arrangements will apply instead of the default provision in the Act. If there is no trust deed in place, the default provisions will apply (other than in cases where the circumstances in which the trust operates require or imply the application of alternative arrangements).
The report is at https://www.scotlawcom.gov.uk/files/4014/0904/0426/Report_on_Trust_Law_SLC_239.pdf.
The SLC gave consideration to a comprehensive statutory statement of trust law but this option was not taken forward. See paragraph 1.17 of SLC Report No 239 and chapter 2 of SLC Discussion Paper No 148.
