Turcan Connell
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10 Contributions by Turcan Connell Experts
PRACTICE NOTES
FORTHCOMING CHANGE :
The Trusts and Succession (Scotland) Act 2024 obtained Royal Assent on 30 January 2024, signalling the first major review of Scottish trusts law in over a century, since the foundational Trusts (Scotland) Act 1921. The trusts-related provisions will only take effect once Scottish Ministers bring forward the necessary secondary legislation, whereas certain measures on succession commenced on 30 April 2024. Key updates aimed at modernising the framework are summarised in News Analysis: Trusts and Succession (Scotland) Bill passed. Practice Notes covering Scottish trusts and succession will be updated further to reflect this new legislation...
Appointment as trustee in Will or deed
In practice, trustees are appointed (or nominated) in the relevant deed of trust. For Will trusts (or mortis causa settlements), the trust deed is, or is derived from, the deceased’s Will. An appointment only takes effect once the nominee accepts the role, either
Private Client
PRACTICE NOTES
FORTHCOMING CHANGE:
The Trusts and Succession (Scotland) Act 2024 gained Royal Assent on 30 January 2024, marking the most significant reform of Scottish trust law in more than a hundred years. Once commencement orders are issued, this Practice Note will be revised to align with the new legislation.
A trust is one of several legal forms available to establish a charity in Scotland. By definition, charitable trusts are governed by both charity law and trust law. Of roughly 24,600 entries on the Scottish Charity Register, about 3,000 operate as charitable trusts (2025 figures). Many bodies are colloquially called ‘trusts’ despite being constituted as companies limited by guarantee, Scottish Charitable Incorporated Organisations (SCIOs), or created by Royal Charter or Act of Parliament. This Practice Note concerns charitable trusts in the strict sense, not other structures that merely include ‘trust’ in their
Private Client
PRACTICE NOTES
FORTHCOMING CHANGE :
The Trusts and Succession (Scotland) Act 2024 obtained Royal Assent on 30 January 2024, representing the first substantive review of trusts law in Scotland in more than a century since the principal statute, the Trusts (Scotland) Act 1921, was enacted. The trusts provisions will commence only once Scottish Ministers make the required secondary legislation, whereas some succession measures took effect on 30 April 2024. The core updates designed to modernise the law are set out in News Analysis: Trusts and Succession (Scotland) Bill passed. Practice Notes covering Scottish trusts and succession will be further revised to reflect this new legislation.
What is a Personal Injury (‘PI’) trust?
A PI trust is:
any type of lawful trust arrangement
that ring-fences sums paid as a result of personal injury to the injured individual
for the injured person’s benefit
A PI trust is
Private Client
PRACTICE NOTES
FORTHCOMING CHANGE :
On 30 January 2024, the Trusts and Succession (Scotland) Act 2024 obtained Royal Assent, representing the first significant review of trusts law in Scotland in more than a century since the principal Trusts (Scotland) Act 1921. Provisions concerning trusts will commence only when Scottish Ministers introduce the necessary secondary legislation, whereas certain succession provisions came into force on 30 April 2024. The main reforms aimed at modernising the law are outlined in News Analysis: Trusts and Succession (Scotland) Bill passed. Practice Notes covering aspects of Scottish trusts and succession law will be further updated to align with this new legislation. At the outset, note that powers authorise trustees to act and advance the trust purposes, while duties oblige trustees to discharge an obligation.
Source of trustees’ powers
Trustees derive their authority from both the prevailing law and the relevant deed of trust. Their powers arise from a
Private Client
PRACTICE NOTES
Unrestricted funds—general use of assets
The overarching rule for applying a charity’s assets is that, unless a specific restriction applies, both income and capital should be used to further the charity’s purposes and to deliver public benefit. Even where funds are classed as unrestricted, there may still be constraints on spending income and capital on the charity’s assets, typically set out in the charity’s constitution. Constitutions may impose conditions on distributing income, on carrying income forward for use in later years, or on accumulating it and converting it into capital. Limits on distributing capital may likewise be specified in the constitution. Where the constitution is silent, the usual expectation is that trustees will, as a minimum, distribute income and have discretion to distribute capital. Funds that are not unrestricted generally fall into three main types:
designated funds (which are truly a subset of
Private Client
PRACTICE NOTES
FORTHCOMING CHANGE:
The Fundraising Regulator has recently revised the Code of Fundraising Practice, and a revised code was published in early 2025. The revised code will take full effect from 1 November 2025, with a structured transition phase commencing in May 2025.
Self-regulatory regime in Scotland
Apart from limited statutory provisions, charity fundraising in Scotland is self-regulated. Since July 2016, following a review carried out on behalf of the Scottish Government, the regime has been described as enhanced self-regulation. This places the initial responsibility on charities when concerns about fundraising practice arise.
Fundraising staff (where they exist) should seek to resolve a complaint at the first opportunity.
If this does not work, the second stage is a direct complaint to the charity’s trustees.
Role of the Scottish Fundraising Adjudication Panel
If a complaint needs to go beyond a charity’s trustees, the third and final step is to take the
Private Client
PRACTICE NOTES
FORTHCOMING CHANGE:
The Charities (Regulation and Administration) (Scotland) Act 2023 will be implemented in two additional stages, which are expected to occur (i) in late summer or early autumn 2025 and (ii) by the close of the 2025 calendar year, respectively. The Scottish Government has indicated it will legislate to revise the accounting audit thresholds in Scotland, in order to raise the gross income threshold from £500,000 to £1m. New regulations are expected in autumn 2025.
Regulation by the Office of the Scottish Charity Regulator
The Office of the Scottish Charity Regulator (OSCR) was created by the Charities and Trustee Investment (Scotland) Act 2005 (2005 asp 10) (CTI(S)A 2005) to be the registrar and regulator of Scottish charities. It functions as the registrar and regulator of Scottish charities...
Private Client
PRACTICE NOTES
FORTHCOMING CHANGE :
The Trusts and Succession (Scotland) Act 2024 obtained Royal Assent on 30 January 2024, representing the first overhaul of Scottish trusts law in more than a century since the Trusts (Scotland) Act 1921. The trusts elements will only commence once Scottish Ministers make the necessary secondary legislation to bring them into force, while certain succession provisions took effect on 30 April 2024. A summary of the key reforms aimed at modernising the framework appears in News Analysis: Trusts and Succession (Scotland) Bill passed. Practice Notes covering Scottish trusts and succession topics will be updated further to align with this new legislation.
What is a discretionary trust?
A discretionary trust or discretionary settlement arises where a person—or persons—(traditionally termed the truster or trusters in Scots law, though the English terminology of ‘settlor(s)’ is becoming more commonly adopted) transfers or settles property on
Private Client
PRACTICE NOTES
FORTHCOMING CHANGE :
The Trusts and Succession (Scotland) Act 2024 obtained Royal Assent on 30 January 2024, signalling the first significant reassessment of Scottish trusts law in more than a century since the foundational Trusts (Scotland) Act 1921. The trusts provisions will only commence once Scottish Ministers introduce the requisite secondary legislation, whereas certain succession provisions took effect on 30 April 2024. The key updates designed to modernise the regime are outlined in News Analysis: Trusts and Succession (Scotland) Bill passed. Practice Notes covering aspects of Scottish trusts and succession law will be further revised to reflect this new legislation...
Liferent trusts
A liferent trust is a vehicle that, once established, grants a beneficiary or beneficiaries the right to use the trust property and to receive its income. The individual benefiting from the use or fruits of the trust property is termed the
Private Client
PRACTICE NOTES
FORTHCOMING CHANGE :
The Trusts and Succession (Scotland) Act 2024 received Royal Assent on 30 January 2024, delivering the first overhaul of Scottish trusts law in over 100 years since the Trusts (Scotland) Act 1921. Provisions on trusts require commencement by secondary legislation from Scottish Ministers, while certain succession measures took effect on 30 April 2024. The principal updates to modernise the framework are outlined in News Analysis: Trusts and Succession (Scotland) Bill passed. Practice Notes covering Scottish trusts and succession will be further revised to reflect this new legislation.
What is a trust for (or with) a vulnerable beneficiary?
A trust for a vulnerable beneficiary falls into one of two types:
a disabled person's trust; or
a trust for a bereaved minor (referred to as ‘relevant minors’ in statutory provision)
Where a trust satisfies both sets of conditions, it is treated as a disabled person's trust, allowing it to
Private Client
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