Legal Practice Notes

FORTHCOMING CHANGE The Trusts and Succession ( Scotland) Act 2024 obtained Royal Assent on 30 January 2024, representing the first comprehensive reconsideration of Scottish trust law in more than a century, since the principal Trusts ( Scotland) Act 1921 was enacted. The trusts elements will only operate once Scottish Ministers make the necessary secondary legislation to commence them, whereas the provisions on succession took effect on 30 April 2024. A synopsis of the principal reforms designed to modernise the law appears in News Analysis: Trusts and Succession ( Scotland) Bill passed. Definitions Arriving at a fully adequate definition of a ‘trust’ is challenging, given the breadth of contexts in which trusts arise, and a trust itself has no separate legal personality. For practical purposes, a ‘trust’ can be viewed as a legal arrangement whereby legal title to property passes from the truster to one or more...

Practice Note This Practice Note was initially prepared by Christopher Kerr- Smiley, Legal Director at Womble Bond Dickinson, and is now overseen by Lexis+® UK Private Client. Trusts are frequently adopted by private individuals to hold assets, typically to safeguard and manage them for others—most often relatives—though sometimes for the settlor’s own benefit too. Commercial practitioners regularly encounter trusts where one or more parties to a deal they advise on hold property in a trustee role. The legal arrangement created by a trust, however, is not confined to family wealth planning and extends well into commercial practice. Trusts feature across a range of commercial scenarios, including: pension trusts employee benefit trusts unit trusts lending arrangements, for example syndicated loans smaller charities operating through a trust framework See Practice Note: Commercial uses of trusts. The question of how far...

Use the link beneath to obtain the training slides. Contents Core elements of a trust Types of trusts Express trusts Interest in possession trusts Discretionary trusts Perpetuities Accumulations Trust drafting—summary Trust drafting— Parties and Background Trust drafting—definitions Trust drafting—dispositive Trust drafting—powers Trust drafting—further essentials ......

This Practice Note This Practice Note explores trusts and property law that may arise in family proceedings, including invalid or sham trusts, and property law questions such as proprietary estoppel and improper transfers. It also addresses when deploying these areas may aid a party in family cases, together with the evidence needed to advance trusts or property law submissions. The court may vary a settlement within section 24(1)(c) of the Matrimonial Causes Act 1973 ( MCA 1973) or Schedule 5, Part 2 to the Civil Partnership Act 2004 ( CPA 2004) (see Practice Note: Trusts—variation of a nuptial settlement), or treat trust assets as a financial resource of a party (see: Introduction to trusts within financial proceedings— Trusts as a financial resource). The court may further take account of trust assets by making findings and/or granting relief grounded in trusts or property law that go to the...

FORTHCOMING CHANGE: On 15 December 2025, the DWP opened a consultation to strengthen trusteeship, governance and administration standards for trust-based pension schemes (closing 6 March 2026). Proposals include centrally set, mandatory accreditation for professional trustees, a statutory definition of “professional trustee”, initiatives to enhance trustee board diversity, a non-public trustee directory overseen by the Pensions Regulator ( TPR), and potential TPR regulatory oversight of pension scheme administrators. This consultation forms part of a wider reform package designed to raise governance as the pensions landscape consolidates into fewer, larger schemes, and also examines measures such as improving board diversity, introducing a statutory trustee directory and intensifying regulatory oversight. Taken together, these moves signal a transition from encouraging accreditation towards a possible compulsory framework for professional trustees. For further information, see Professional trustees, below. THIS PRACTICE NOTE APPLIES TO TRUST- BASED OCCUPATIONAL PENSION...

Trustees are obliged to administer the trust fund, in respect of both income and capital, until the beneficiary attains the vesting age. Note that on 27 February 2023 the Marriage and Civil Partnership ( Minimum Age) Act 2022 came into force, meaning that on or after that date a person is not permitted to marry or enter a civil partnership under 18 in England and Wales. See News Analysis: Marriage and Civil Partnership ( Minimum Age) Act 2022—implications for trusts. Statutory power or express power The power of advancement may arise by statute under section 32 of the Trustee Act 1925 ( TA 1925), or by an express clause contained in the trust instrument. This is a fiduciary and dispositive power that enables a trustee to bring forward (advance) a beneficiary’s entitlement under the trust. TA 1925, s 32 will generally be implied into every trust as...

General investment power The authority trustees hold to manage a trust effectively originates in statute, chiefly the Trustee Act 1925 ( TA 1925) and the Trustee Act 2000 ( Tr A 2000), and is supplemented by the terms of the trust instrument, save for the following: trustees of occupational pension schemes authorised unit trusts charitable common investment schemes Before Tr A 2000, where no express powers were granted, trustees were required to operate under the Trustee Investments Act 1961 ( TIA 1961). Most of TIA 1961 was later repealed by Tr A 2000, which took effect on 1 February 2001. TIA 1961 imposed tight constraints—for example, trustees were limited to specified “authorised” investments—and, as a result, trust instruments commonly broadened the statutory powers so trustees could invest in any suitable form of investment as though they were absolute owners. Under s 3 of Tr A...

The self-dealing rule The self-dealing rule is related to, yet separate from, the fair dealing rule and the genuine transaction rule. Authority suggests that, properly understood, these rules do not form part of a trustee’s duties or discretions; instead, they function as constraints that bar a trustee from acting in particular ways. This characterisation carries significant implications for the limitation of proceedings that beneficiaries may bring against trustees, influencing how claims can ultimately be pursued......

Practice Note This Practice Note is the first in a pair examining the data protection framework and how it affects trustees. Here, it considers the position under the Data Protection Act 1998 ( DPA 1998), the potentially competing trustee duties and principles, and the way courts have addressed them in recent decisions. Although the DPA 1998 was repealed by the Data Protection Act 2018 ( DPA 2018) with effect from 25 May 2018, the earlier regime continues to govern historic data breaches, subject access requests ( SARs) and other privacy-related claims arising from processing that occurred before 25 May 2018. Keeping sensitive information confidential has long been viewed as one of the attractions of trust arrangements. After Dawson‑ Damer v Taylor Wessing (which has been before the High Court, the Court of Appeal, and returned to both courts on remitted issues), it has become...

Appointment of original trustees Trustees must be expressly and clearly named within the trust deed. For instance: ‘ THIS SETTLEMENT is made the ....... day of ......... BETWEEN: (1) (settlor) of (address) (“the Settlor”) and (2) (original trustees) of (addresses) (“the Original Trustees”).’ Acceptance of office A trustee takes office upon accepting the role. Such acceptance may be express, for example by signing the trust instrument, or implied, for example by personally and directly dealing with trust property. Once in post, trustees occupy a fiduciary role and must act in good faith. The trustee’s duty is to administer the trust solely for the benefit of its beneficiaries. Who can act as trustee Any person, whether male or female, married or unmarried, or any human or corporate body, who is able to hold and dispose of any legal or equitable estate or interest in assets, may create a trust and serve as a...

Nature of powers A trustee’s authority can be grouped as follows: administrative, i.e. powers concerned with careful stewardship in fulfilling the trustee’s obligation to preserve the trust fund dispositive, i.e. powers designed to alter the benefits that beneficiaries are to receive (often called ‘distributive powers’) Powers might be wholly discretionary (such as bare powers of appointment seen in fixed or discretionary settlements), or they may take the form of a trust or duty (as with trust powers within discretionary trusts). A trustee is required to consider whether to invoke a purely discretionary power, yet cannot be forced to do so, even if leaving it unused advantages one beneficiary to the detriment of another. Where a power amounts to a trust or enforceable duty, its use can be compelled; however, the court will not substitute its judgment for the trustee’s regarding the timing and method of...

General law The original trust fund For a trust to operate, some identifiable property must be held on its terms. At establishment, the initial fund can comprise money, other assets, or a blend of both. Once property is transferred, the trustee assumes an ongoing obligation to safeguard it, commencing with gathering in the assets on taking office and concluding with the ultimate distribution to those entitled. From the beginning, trustees should familiarise themselves with the instrument and the condition of the property they are to administer, ensure appropriate investment of funds, and confirm that all securities and chattels are properly held in safe custody. Trustees must consider whether they are authorised to retain the original trust fund as constituted and, if so, whether in practice they ought to do so. In most inter vivos trusts prepared by competent...

Commercial property Commercial property exists to deliver a financial return for the owner by being occupied or used by businesses. That return may arise as rent paid by tenants, or through growth in the asset’s capital value, realised on disposal of the property. Key contrasts between residential and commercial investment include: Costs — large, high‑quality commercial assets generally carry significantly higher price tags than residential property. Valuation — the distinctive nature of many commercial buildings means reliable valuation usually requires professional advice, while house prices are comparatively straightforward to compare. Commercial leases — these typically run for much longer than residential leases, often feature upward‑only rent reviews (so rent cannot fall at review), and place repair and maintenance duties on tenants. The decision to invest in commercial property Trustees may invest in commercial property either directly or indirectly. Indirect investment involves placing funds into a...

It is fairly common for trustees to encounter obstacles when administering trusts, sometimes of a difficult or technical kind. In such circumstances, they may seek the court’s guidance, and they are likewise entitled to the court’s protection while discharging their obligations under a trust. When a trustee invites the court to exercise its powers in a matter affecting the trust, the court’s sole focus is what best serves the trust’s interests; it is not chiefly preoccupied with the rights or positions of adversarial parties. Trustees who obtain a ruling from the court of first instance are safeguarded so long as they comply with what has been determined; however, if they pursue an appeal and are unsuccessful, they face an almost inevitable order to pay costs. A notable distinction arises when a trustee contemplates an application to the court. Where a...

Introduction Many trusts hold shares as elements of a broader investment portfolio. This Practice Note considers circumstances and examples where trustees possess shares to further another commercial objective. Such trusts fall into two principal types or categories: where the goal is to consolidate management and, potentially, voting powers in the shares while preserving the beneficiaries’ economic entitlements. These arrangements will typically be bare trusts, and trusts designed to retain shares so as to confer benefits on beneficiaries at a later point in time and possibly on a discretionary footing. Such trusts will generally be settlements for tax purposes Voting trusts A voting trust is frequently paired with a shareholders’ agreement, so the structure is part trust and part contract. The trust/contract may operate in a variety of different ways. For example, in Booth v Ellard, a group of family members settled their shares in the...

Trust litigation is commonly divided into three distinct forms: a disagreement concerning the trusts upon which trustees are said to hold the subject matter of the trust a disagreement with one or more beneficiaries about the propriety of any step the trustees have taken, omitted to take, or may or may not take in the future a disagreement with persons, otherwise than in their capacity as beneficiaries, regarding rights and liabilities assumed by the trustees as such in the course of administering the trust The first type may be amicable, in that the court’s assistance is sought to settle the construction of an instrument; equally, it can be hostile, for example where the validity of the trust itself is impugned. The dividing line between a friendly and a hostile matter can be hard to draw. The second type is the more recognisable beneficiary dispute, such as where a breach of...

Powers to invest Trustees’ authority to run a trust is grounded in statute—chiefly the Trustee Act 1925 and the Trustee Act 2000 ( Tr A 2000)—and is augmented by the trust instrument’s terms. It is common for trust deeds to confer express, extended investment powers, giving trustees greater freedom over how funds are invested and, historically, to bypass the onerous administrative rules of the Trustee Investments Act 1961 (substantially repealed by Tr A 2000). The statutory investment powers are contained in Tr A 2000, s 3 (widely referred to as the general power of investment) and operate in addition to any powers granted by the trust instrument, but remain subject to any restriction or exclusion the instrument imposes ( Tr A 2000, s 6). The general power of investment applies to trusts and Will trusts created both before and after Tr A 2000...

One cannot pursue a breach of trust claim or seek an administration order concerning a trust unless its existence is proven. Conversely, from a prospective defendant’s perspective, showing that no trust exists will release them from liability. Establishment A settlor may create a trust in one of two ways: by declaring that they, acting as trustees, hold specified property absolutely for another; or by transferring assets to independent trustees on the basis that they will hold the property for specific individuals Whichever route is taken, the declaration must be irrevocable and the trust must be fully constituted. In practical terms, once the settlor has done everything necessary to effect the transfer of the property, the settlement becomes irrevocable. The question is whether anything remains to be done by the settlor, and not by the beneficiaries or the trustees. A basic formulation of the key...

Common misconceptions There are several recurring misconceptions about the standard opening wording used in trust deeds, for example, that practitioners frequently encounter in practice and in correspondence: it is not required for the trustees to be parties to the deed of trust—the principal benefit of naming them is that, by signing the deed, they accept the office of trustee and acquaint themselves with the trust’s terms (note that, once the office is accepted, it cannot be disclaimed, although a trustee may retire) although it is preferable to include a date, the absence of one does not undermine the trust’s validity—a trust only takes effect (regardless of any date inserted) when the trustees are holding property in line with its terms offshore trusts can involve a protector, whose appointment is intended to enable a measure of oversight in relation to overseas trustees; the protector may (but need not) be a...

Gathering information from the client On receiving instructions, it is advisable to have the client complete a statement of assets and liabilities. This then allows consideration of the amount to settle into trust, which items should be placed into the trust, or whether to set up a trust at all, instead of gifting outright or keeping the assets......