Official Report 1032KB pdf
The next item of business is a debate on motion S6M-10595, in the name of Siobhian Brown, on the Trusts and Succession (Scotland) Bill at stage 1. I invite members who wish to speak in the debate to press their request-to-speak buttons now or as soon as possible. I call Siobhian Brown to speak to and move the motion for around eight minutes.
15:30
I value greatly the law reform work that the Scottish Law Commission undertakes to simplify and improve our laws, and I remain committed to introducing bills to implement its recommendations.
The Trusts and Succession (Scotland) Bill, which we are discussing today, is the second SLC bill that the Government has introduced in this session. The most recent programme for government included a commitment to introduce a third SLC bill this year, which will be the eighth SLC bill in a decade, since Parliament updated its rules in 2013.
I recently wrote to the commission to say that my officials had begun detailed work on another three SLC reports—on leases, contract and cohabitation—although decisions on the legislative programme are a matter for Cabinet to decide as part of the development of the annual programme for government.
I thank the Scottish Law Commission for the work that it does and, in the case of trusts, Lord Drummond Young, who is not only a former chair of the SLC but is the lead commissioner who prepared the report on trust law reform and whose recommendations the bill will implement.
I also thank the members and clerks of the Delegated Powers and Law Reform Committee for their work in scrutinising the bill and for the comprehensive and measured stage 1 report. I welcome the committee’s agreement to the general principles of the bill.
Trusts are an important legal structure in Scotland. In modern society, they are used as a solution in an incredibly wide variety of situations, as we have all heard from the evidence that has been given to the committee so far. They are used extensively in individual estate planning, and to protect and administer assets on behalf of vulnerable people, including children, adults with incapacity and people with disabilities. They are also the legal form of many pension funds and are often used in commercial transactions to set funds aside to deal with future liabilities.
Scots law has not kept up to date with the variety of ways in which trusts are used. The principal trust law legislation is now more than 100 years old and was drafted at a time when society was very different. The aim of the bill is to modernise the law of trusts; it takes forward all the substantive recommendations for reform that the SLC proposed.
The minister could perhaps address the issue that the Law Society of Scotland raised, which said that the bill is a missed opportunity
“to enact legislation on the nature and constitution of trusts”
and talked further about the need for a legal definition, and the
“nature of a trust in Scots law; rules for creation; special rules for "truster as trustee" trusts; latent trusts”
and so on. The Law Society feels that there are many things that the bill does not contain. Why does the bill not contain any of the things that the Law Society of Scotland mentioned in its submission to all of us?
I saw that report yesterday. There was a lot in that question, which I will come to further on.
Given the versatility of the trust and the uses that it is put to, the bill will ensure that trust law is clear, coherent and able to respond appropriately to modern conditions. Some of the key changes that the bill makes are: changing the method for appointing and removing trustees, including the introduction of a non-judicial method for removing trustees; reforming the powers and duties of trustees, including setting out trustees’ duty of care; and the introduction of a number of important powers that will be conferred on the court, including a new power to alter trust purposes after a period of 25 years has elapsed.
Stakeholders have broadly welcomed the bill and its policy intent. Although many of them have been positive, I am aware that points of detail have been raised, which have been identified in the committee’s report.
The committee heard evidence from a number of academics and legal professionals about the investment power of trustees. The bill largely restates the existing statutory investment powers of trustees. In general, wide powers of investment are conferred on trustees, and they are tightly constrained by the trustees’ duties, including their duty of care and fiduciary duties. Stakeholders would like to see something in the bill about the ability of trustees to reflect environmental, social and governance goals in their investment decisions.
I am grateful to the minister for giving way. One of the areas of concern is the interrelationship with charities law, whether it be parallel or whether it crosses. Will the minister also be able to deal with that in her opening speech?
I will come to that.
I have heard that the bill containing an express provision on such an ability would be helpful in making it clear that, when assessing the suitability of an investment for a trust, financial returns are not the only consideration that might be taken into account. Environmental and social impacts, for example, could also be relevant considerations. I will consider that further and am looking forward to working with the committee on that.
Another issue that the committee raised is the expenses of litigation. Awards relating to litigation expenses are made at the discretion of the court. When an award is made against trustees, normally the trustee would be personally liable, but they have the right of relief against the trust estate, provided that the expenses are necessarily, properly and reasonably incurred. The bill will alter that: trustees will no longer be personally liable for expenses. The court can, however, impose on trustees personal liability for such expenses in certain circumstances. That includes when the trust property is insufficient to meet the expenses, or when the trustee has brought about the litigation by breach of duty.
As some stakeholders have pointed out, trustees of underfunded trusts have an unfair advantage in raising litigation without being personally liable for expenses. The result would be that a successful litigant would be forced to meet expenses themselves. I have heard the strong statement made by the Law Society that that might put people off accepting office and will act as a disincentive to trustees litigating. During the summer, my officials met the Law Society and the Society of Trust and Estate Practitioners to hear more about their concerns, and I will take the issue away and consider what more can be done in the bill to achieve a better balance between the personal liability of trustees and the problem of underfunded trusts litigating.
Another issue that the committee raised is how “incapable” is defined in the bill. The bill takes a slightly different approach to that which is found in incapacity legislation, and the concern was raised that the two approaches could deviate unacceptably, as future reforms are made. I recognise the problem and I thank the committee for its work on the matter. I will look at the issue again and consider what can be done to lessen stakeholders’ apprehensions.
Finally, I would like to talk about succession, because this is the Trusts and Succession (Scotland) Bill. Two provisions on succession law are included in the bill. One is technical and is intended to clear up potential confusion with the drafting of a section in the Succession (Scotland) Act 2016. The other is more substantive. It makes changes to the order of intestate succession so that the spouse or civil partner of a person who has no children and dies without leaving a will would inherit the entire estate of the deceased person. That change reflects what many people would expect happens already but is not, in fact, reflected in the current law.
I am committed to finding a solution to one issue that is not included in the bill. It involves circumstances in which an unlawful killer is appointed to be an executor of their victim’s estate. The existing law on that is unclear, which is why I instructed my officials to consult targeted stakeholders over the summer. The aim was to test two models that might provide a solution to a deeply upsetting situation. It is important that whatever we put in place is capable of working in practice because we do not want a situation in which the deceased’s estate cannot be administered or its administration is called into question. I have kept the committee up to date on that issue and I will continue to do so.
I move,
That the Parliament agrees to the general principles of the Trusts and Succession (Scotland) Bill.
I invite Stuart McMillan to speak on behalf of the Delegated Powers and Law Reform Committee.
15:39
I thank everyone who has contributed to the committee’s scrutiny of the bill, whether in writing or by appearing before the committee during one of our evidence sessions. I also thank the minister and her officials for the evidence that they have provided to the committee and for the response to our stage 1 report, which came in yesterday. I also thank the Scottish Law Commission for proposing the bill. In addition, I thank my fellow members of the committee for their enthusiasm and tenacity in grappling with some of the issues raised by the bill—I will come on to the one that was touched on by the minister later in my contribution—and the committee officials, who have provided excellent assistance to us.
We are clear that the bill proposes important reforms that will benefit people across Scotland. As members will be aware, one of the responsibilities of the Delegated Powers and Law Reform Committee is to scrutinise certain Scottish Law Commission bills, which can often be perceived to be quite technical. I believe that the committee’s scrutiny of the Trusts and Succession (Scotland) Bill, as well as proving to be interesting, showed the importance and relevance of the bill to everyone who lives in Scotland.
At the outset of the debate, it is important for members to consider how important trusts and succession law are for our constituents. A trust is a legal device for managing assets through which a person or—to use the technical term—a truster passes assets to the trustees. Normally, that is for the benefit of individuals known as beneficiaries. Beneficiaries can include small defined groups or individuals, or large numbers of people and organisations. Trusts are frequently used to help to manage estates after a death, and they are used by community-based groups and organisations such as churches and charities, as well as individuals, for a raft of reasons.
There was almost universal support for the proposed reforms in the bill. Stakeholders reaffirmed to the committee how important trusts are. The Scottish Law Commission told us that trusts “permeate Scottish society”. We also heard that the reforms represent a significant improvement on existing trust law, which is more than 100 years old. Consequently, it is very difficult to use and understand. That is particularly the case for laypeople who become trustees.
Succession law, which is sometimes called inheritance law, sets out who should inherit someone’s money, property or possessions in the event of a death, which we know will come to every one of us. The bill’s fairly modest provisions on succession were generally welcomed by stakeholders.
Despite the support that we heard expressed for the bill, the committee also heard that there is room for improvement, and it made a number of recommendations, some of which I will now touch on.
We all owe the Delegated Powers and Law Reform Committee a debt of gratitude for the work that it has done on the stage 1 report that has been presented to the Parliament.
Given what the convener has said, why did the committee feel that a full codification of the law on trusts, which I mentioned in my intervention on the minister in relation to the Law Society of Scotland’s submission, was not appropriate at this time?
I stand to be corrected by members of the committee who are present in the chamber, but, from memory, I think that that was because of the length of time that such a codification would take and the challenge that it would present for the Government and the Parliament to get that right. There was no shortage of will or desire for that to happen, but it was felt that the length of time that it would take would have delayed the implementation of the bill. If I am incorrect about that, colleagues will undoubtedly correct me.
One area in which improvement was thought to be possible concerned the new power in the bill for a majority of trustees to be able to remove another trustee on certain grounds, including when that trustee is deemed incapable, which the minister touched on. Although witnesses generally supported that provision, some stakeholders told the committee that they had concerns in relation to the potential for abuse, the subjective nature of the process of assessing incapacity and the burden of placing the assessment of capacity on trustees who might feel unqualified to take on that role.
The committee acknowledged that there is a route through the court for someone who has been deemed incapable to challenge their removal based on incapacity. However, we felt that the route might not be clear or obvious to a trustee in that situation. Therefore, the committee hopes to see changes to the bill, including specific reference to the right of a trustee deemed incapable by fellow trustees to go to court to challenge that decision. The committee considered that that might be helpful to someone who found themselves in that situation. We also considered the future proofing of that aspect of the bill, because of the different definitions of incapacity that exist.
The committee was able to scrutinise the bill’s potential interaction with Scotland’s journey to net zero. An issue that was raised with the committee was whether wording should be included in the bill to expressly permit trustees investing trust property in the absence of any relevant provision in the trust deed to choose so-called ESG—environmental, social and governance—investments. Those are considered to be more sustainable investment choices, chosen based on their environmental, social and governance credentials, even if they might not lead to the maximum possible income for the trust. One witness, Yvonne Evans, suggested that that would be an “attractive and modern” approach to supporting Scotland’s net zero goals. However, some witnesses thought that that power might already exist.
The committee therefore recommended that the bill be amended to explicitly allow trustees, subject to the terms of the trust deed, to choose to invest in ESG investments, and we look forward to working with the Scottish Government to make that happen. We welcome the minister’s response in that regard.
The committee heard stakeholders including the Law Society of Scotland express concerns about the bill’s default position on the personal liability of trustees for court expenses in cases in which the trust property is insufficient to cover such trusts. The Law Society pointed out that
“Non-recovery is a standard risk of litigation”
and that it is unclear why the situation should be different in litigation involving a trust compared with that involving, for example, a company.
I turn to issues that are not currently included in the bill. Unlike in the original draft bill from the Scottish Law Commission, the definition of “trust” in the bill does not include pension trusts, which concerns some stakeholders. However, the Scottish Government has confirmed that it is in talks with the United Kingdom Government to grant an order under section 104 of the Scotland Act 1998 to apply the changes that are proposed in the bill to pension scheme trusts.
As colleagues on the committee know, I highlight section 104 orders regularly, because, as with the Moveable Transactions (Scotland) Bill and with this bill, there can be a delay of between 12 and 18 months in getting the section 104 order through the system. I welcome the fact that the Scottish and UK Governments are in discussions on that part of the bill, and I hope that progress will be made more quickly than 12 to 18 months. The committee recommends, as a priority, the timely implementation of the section 104 order to ensure that commencement of the bill is not delayed and that there is no need for an undesirable dual operation of trust laws.
On issues in relation to succession law that are not covered by the bill, some stakeholders considered that the bill should be amended to clarify that the law does not permit an unlawful killer to be an executor of their victim’s estate. If unlawful killers are appointed as executors, even if they cannot inherit under the existing law, their continued personal contact with the victim’s family under the guise of winding up the estate could be considered distressing, which it would be. The committee therefore recommended that the bill be amended to clarify that the law does not permit an unlawful killer to be an executor of their victim’s estate. Furthermore, the committee considered that, notwithstanding the presumption of innocence, it would appear to be inappropriate for a person who was charged with murder or culpable homicide to act as executor during the course of their prosecution. The committee spent a great deal of time on that matter. We all wanted to get to the same point, and we all recognised that it is a challenging aspect to get right.
If the bill successfully proceeds through the Parliament, it will help our constituents in every part of the country. It will not fix the problems that many people who have been stung by the McClure Solicitors fiasco face, but I hope that it can prevent many more people from being stung and out of pocket in the future.
We look forward to working with the Scottish Government in advance of stage 2. I commend the committee’s stage 1 report to members.
15:49
I begin by apologising to members for participating remotely. I had planned to be in Parliament in person, but I have had flu symptoms and a temperature overnight and felt it best not to bring that to the chamber.
I say at the outset that Scottish Conservatives will support the bill at decision time and that we endorse the Delegated Powers and Law Reform Committee’s report. Although the law affecting trusts may not be at the top of the political agenda, it is clear from the work that has been undertaken by the Scottish Law Commission, the Scottish Government and, latterly, by the committee itself, that, more than a century since the last major reform, modernisation of the law is not only desirable but badly needed and broadly supported.
As it stands, the bill represents a significant step forward, but detailed work is still needed to ensure that the legislation is workable and to address the concerns of key stakeholders. The committee noted that work remains to be done in a number of areas of the bill and was sympathetic to stakeholders’ concerns about parts 1 and 2 of the bill.
More generally, a matter that I pressed the minister on at committee is that there is a feeling in some quarters, especially after having waited 100 years for change, that the bill misses the opportunity to do more, particularly with regard to maximising the codification of trust law. My colleague Stephen Kerr asked the convener why the committee is content to proceed with the bill when those concerns have been raised. One reason for doing so, as Stuart McMillan said, is that starting substantive new work on the bill would have caused delays. There was also strong evidence from a number of witnesses, including the SLC, that some areas of trust law are not settled and that case law is not sufficiently established to support full codification.
I remain keen to see more codification and note that the Law Society of Scotland’s briefing for today’s debate argues that more could be said about the nature and constitution of trusts. Like the Law Society, I would be interested to hear more from the Scottish Government about the other options that it is looking at to take that work forward outside the scope of the bill and, in particular, to define different types of trust. I would be keen to hear more from the minister about that in closing.
I move to some particular issues that need further attention.
With regard to the issue of charities, which I raised earlier, is the member concerned about the challenges for some charities, many of which are fundamentally based on trusts and which may find some elements of the bill confusing?
I share that concern, which is something that the committee thought about, and I know that other committee members are also concerned. The landscape is complicated, which is why one of the key recommendations in our report is that good guidance should be available. We recognise that many people who are involved in trusts do so as volunteers or do not have detailed experience or understanding of the law. Anything that the Government can do to provide clarity is really important.
I move to some key issues. Although this is an SLC bill, it is important that the Scottish Government and the minister take ownership to ensure that any concerns or suggested improvements that have come to light through the parliamentary process are acted on, fully considered and, where possible, incorporated into a strengthened final bill. It may be tempting to think that it will all fall back on the SLC or others. However, I am pleased that, as we see in the minister’s response to the stage 1 report, the Scottish Government seems to be taking an active interest in resolving some of the committee’s concerns.
In her remarks, the minister touched on section 65, which is on litigation expenses. I emphasise that the concerns about that, which the committee discusses in its report, continue. The Law Society of Scotland was quite outspoken on section 65 in its written evidence. It stated:
“This is quite a radical provision. There are real issues with the default being that the trustees personally pick up the liability for expenses where the trust property is insufficient unless they can show that would be unfair. This may put people off accepting office and will more than likely be a disincentive for trustees to litigate”.
Section 65 gives me cause for concern on two grounds. First, I am not sure that SLC bills are the place for radical provisions and major departures from existing practice. Secondly, I am concerned about the practical implications that the provisions may have, with individual trustees potentially being left protecting their own financial interests rather than doing what is best for the trust. I understand that there is a fine balance to be struck, but I believe that section 65 needs further work and clarification. I welcome the confirmation that the minister is considering the provisions and I hope that the Government will lodge amendments at stage 2 to make them absolutely clear. I am also keen to understand the evidence on underfunded trusts entering litigation, and to get a sense of how much of a real problem that is at present. I have not seen that or heard any real evidence of it.
I also draw the minister’s attention to section 61 and the 25-year limit. Again, I am pleased that the Scottish Government has welcomed the committee’s recommendation on that, and I understand that the matter is being considered with a view to an amendment being lodged at stage 2 regarding the circumstances in which an application may be made to the court.
Although a range of views were expressed, the committee agreed that, on balance, the 25-year period in the bill is appropriate. However, we stated that we would like a caveat to be added that would allow the court to permit alteration of the 25-year period in exceptional circumstances. That would enable the law to capture, for example, circumstances that were not reasonably foreseeable at the time when the trust was created but which are detrimental to the operation of the trust. That seems pragmatic and it would strengthen the bill.
I also flag up the on-going concerns about incapacity, which were mentioned by the convener and touched on by the minister. There are concerns about how incapacity is defined in the bill and how things will work in practice. I am sure that other members will cover those in further detail, but I am clear that amendments are needed in that regard if we are to have confidence that we have got the legislation right.
I commend the committee’s stage 1 report, which covers those and many other aspects of the bill in much greater detail than I have managed to do in the time allotted today. It is clear that we have an important and much-needed piece of legislation in front of us. I hope that, through stages 2 and 3, we can get to a point where we can all be confident in it.
15:58
Scottish Labour welcomes the Trusts and Succession (Scotland) Bill and is grateful to the Scottish Law Commission for its body of work on both trusts and succession. Those in the legal profession have had to work around the complexities and more arcane aspects of the Trusts (Scotland) Act 1921 for many decades, and a new act that reforms and clarifies some aspects of the law relating to trusts for the 21st century will be most welcome.
We are grateful to the many representatives of the legal profession who gave evidence on the bill. I also place on the record my and Labour’s thanks to members of the Delegated Powers and Law Reform Committee for their scrutiny of the bill thus far.
Although the bill has broadly been supported by stakeholders and, indeed, by the committee, there remain questions for the minister and her Government to answer with regard to the trusts reforms.
Given that inconsistencies with the Adults with Incapacity (Scotland) Act 2000 were noted, will changes be made to the definition of “incapacity”? I would love clarity on that.
What clarifications will be provided on trustees’ duties to provide information, and exactly what information must they provide?
I welcome the minister’s confirmation that she would ask the UK Government for a section 104 order so that pensions could be included in the scope of the bill. In the event that the bill passes, I urge both Governments to work constructively to that end. Too often, in this country, good governance suffers from the inability of the Scottish and UK Governments to put aside political grievance and work together for the better ends of all Scots. In this case, I hope that that does not happen.
If we are able to pass into legislation a bill that provides a single coherent statute on trusts, we will have served well not just the legal profession but all those who make use of trusts. There has been some commentary so far on the great extent to which citizens and institutions across Scotland rely on trusts.
When it comes to succession, the reforms that are included in the bill are certainly welcome. It is right that the bill takes cognisance of modern attitudes. When a person dies intestate and without children, the bereaved spouse or civil partner should inherit their estate. At a time of great loss, the law should not add to the burden of the bereaved.
As the Law Society raised, there remain some uncertainties about what happens if a person dies intestate while separated from their spouse or civil partner. It would be helpful if the minister could provide further clarity on the Government’s position on that.
It is clear that work is still to be done on the bill in order for it to be a comprehensive piece of legislation on trusts and succession. Our colleague Stephen Kerr has already raised those issues, which were raised with us by the Law Society.
In addition, the Scottish Parliament information centre has pointed out that part 2 of the bill would leave unimplemented much of the Scottish Law Commission’s work to date on succession law. In 2020, the Scottish Government said that it would legislate at the “next legislative opportunity” on banning a person who is convicted of unlawful killing from being an executor of their victim’s will. In February this year, the Scottish Government reiterated its commitment to that reform. I was glad to hear the minister acknowledge in her opening statement that the bill as it stands does not put that scenario beyond doubt. There is a clear opportunity to make good on the Government’s commitments and to put that in place.
During scrutiny of the bill, the minister told the committee that she would explore what could be done in that context to ensure that the law is clarified, and she has reiterated that today. Stuart McMillan made strong comments on the issue, and there would be broad support for dealing with it. Although the number of cases may be small, I am sure that we all agree that such a situation would be intolerable for the family and loved ones of a victim. I therefore urge the Government to remove without delay what is a cruel and untenable anomaly of our legal system.
I look forward to the rest of the debate. Labour supports the principles of the bill as it stands, but we believe that there is scope for amendment. I look forward to other members’ contributions.
Before we move to the open debate, I give a gentle reminder that members who participate in the debate need to remain in the chamber for the opening and closing speeches.
I call Bill Kidd, to be followed by Stephen Kerr. You have around four minutes, Mr Kidd.
16:03
Thank you very much, Presiding Officer. I do not know whether my contribution will even take that length of time, but I will try.
It is a pleasure for me to speak today as a member of the Delegated Powers and Law Reform Committee and to ask that the Parliament agree to the general principles of the Trusts and Succession (Scotland) Bill at stage 1.
In our stage 1 deliberations, members of the committee broadly welcomed the bill. In our report, we noted that there was widespread support for the bill among stakeholders, acknowledging in particular the importance of trusts in Scotland, alongside the need for the law to be modernised.
As we have heard, our statutory law on the management and administration of trusts is now more than 100 years old and has its roots in a very different era from ours. It is clear that the law in that area has not kept pace with how society has changed and developed, and the bill will bring the legislation into the 21st century.
Of course, although we are supportive of the aims of the bill, we also listened to concerns raised by stakeholders, and I am confident that our approach to the bill at stage 2 will address many of those concerns. Specific concerns were raised regarding the bill’s potential interaction with Scotland’s journey to net zero. I assure stakeholders that the committee looks forward to addressing those concerns by working with the Scottish Government to amend the bill to explicitly allow trustees, subject to the terms of the trust deed, to choose to invest in ESG investments.
We also heard concerns raised by stakeholders about the bill’s default position on the personal liability of trustees for court expenses in cases in which the trust’s property is insufficient to cover any such costs. Our view is that the starting point should be that there is no personal liability on the part of trustees for expenses unless the court deems otherwise, and we look forward to discussions with the Scottish Government regarding considerations as to whether an amendment is required to reflect that.
One issue of possible concern that is not currently covered by the bill, but which I would like to mention for the record, is that of the need for the inclusion of a pension trust in its definition of “trust”. In that regard, we urge the Scottish Government and the UK Government to grant a section 104 order to apply the changes proposed in the bill to pension scheme trusts. We hope that the Scottish and UK Governments will work in close collaboration to that end in order to ensure a smooth enactment of the bill.
I will end by re-emphasising what the convener, Stuart McMillan, said. Although the Trusts and Succession (Scotland) Bill is a technical bill, I hope that members will agree that the committee’s scrutiny has shown it to be anything but dull. Instead, we have shown that the bill has proved to be an interesting and important piece of legislation that proposes to modernise the existing outdated trusts legislation. We are clear that the bill proposes important reforms that will benefit people across Scotland, and we look forward to working with the Scottish Government on the issues that I have outlined, and more, in advance of stage 2.
16:06
I have already put on the record that I am grateful to the Delegated Powers and Law Reform Committee for its stage 1 report.
On the surface of things, this seems like a technical bill. Although I have had to deal with lawyers, professionally, throughout my career before I got into politics, I am no lawyer. That said, technical though it may be, it is in a subject area of the greatest importance to the people of Scotland. It relates in part to an experience that has already been mentioned and that we will all have, sooner or later. We should not resist—this is my basic contribution to the debate—the common sense of the people of Scotland when it comes to the law.
In this area of the law, many people carry with them a perceived sense of what they feel is right, but it is sometimes not right. We should listen as carefully to the common sense of our constituents on matters such as these as we do to the legal counsel of esteemed and learned lawyers. I would like to think that the passage of this bill presents us with an opportunity to encourage everyone in Scotland to make a will, because there are complexities and unexpected legal hoops to go through when someone dies without having set out their last will and testament.
When it comes to making the law, Scots law is based in good, old-fashioned popular common sense, but, when there is not a will, it is far less straightforward and way more unpredictable than most people expect. People assume that, when they die or when their spouse or partner dies, their other half will inherit their estate. People assume that, when assets in a trust are divided in favour of the trustees, the trust can easily be wound up. People assume that, when their spouse is incapacitated, they will be able to act on their behalf in financial and other matters. People assume that the law on such matters will be straightforward, accessible and easily understood, but common sense is not always reflected in the law.
Of course, the law should be kept current and relevant. That is why I am glad that the Conservatives are supporting the bill at stage 1. As it happens, the law in the areas of the bill seems to have become rather untidy and far from accessible. However, I do not shy away from saying that we should consider the law in the context of what the people consider to be within the scope of their expectations; in other words, what people consider to be sensible and reasonable. We should have law that is clear and understandable, as in the instance of this bill.
That is what I and other members mean when we use the word “accessible”. That reflects the fairness that people expect. It should not require payments of thousands of pounds to expensive lawyers to unravel and explain. In short, it should be user friendly.
I whole-heartedly agree with much of what Stephen Kerr is saying, but I have one question. The bill that is before us comes from the work of the Scottish Law Commission and falls under the special procedure because there are non-controversial elements to it. Does he feel that his request perhaps gets close to the boundary of potential controversiality? If so, that may require a different approach by the Parliament.
I do not think that there is anything terribly controversial in what I am saying. I am addressing the expectations that people have about how the law operates in situations in which they go through the loss of a loved one. Their expectations are often founded on the basis of what they think is reasonable and right, but the law does not necessarily provide them with accessibility when it comes to those matters.
The provisions in the bill seem to attempt to consolidate and simplify elements of trust law. The provisions in section 72 are a step in the right direction, but I retain some concerns. When someone in one’s close family dies, it is a time for grief. As the late Queen famously said,
“Grief is the price we pay for love.”
For all of us, as human beings, the process of grieving is important and it needs to be handled with compassion and understanding. Expecting those who are grieving to grapple with complex legal issues is unreasonable and we should seek to reduce that burden of complexity in the bill.
I reassure Mr Kerr that that particular point came up during the committee’s deliberations, and we made a recommendation in our stage 1 report that the cohabitation claim period be extended beyond six months in particular circumstances because of the points that Mr Kerr is raising.
I welcome what the convener has reported.
Changing the law to ensure that an estate is inherited by the spouse when there is no will and there are no children is a welcome reform. That being said, there is still room for ambiguity if the relationship is broken or has been broken for some time. For example, a former partner should not have priority over children. As I alluded to in my interventions on the minister, we are perhaps wasting an opportunity to do the full and serious reform that I think we acknowledge needs to be done.
The number 1 thing that I will say, which I hope makes a contribution to the broader public’s awareness of the bill, is that people should make wills. Those who do not have a will need to make a will so that they have a clearer and unambiguous route to resolving these matters.
I may make myself unpopular with some of my colleagues in the chamber when I say that, in my experience, the involvement of lawyers often brings a burden of complexity and cost that, very often, does not need to exist at all. We should trust the people, through good and simple law, to use their common sense. The law as it is passed in the Parliament should back the people up in doing the right things and in meeting their expectation of right outcomes. I hope that the scrutiny of the bill at stage 2 is rigorous in order to make the bill fit for the expectations of the common sense of the Scottish people.
16:14
I reassure Stephen Kerr that I think that it is very unlikely that he will make himself any less popular than he currently is. [Laughter.]
I agree with the central point that Mr Kerr made, or at least one of his points, which was that, when we undertake this kind of reform, we should have an idea of what is important to local people. The bill touches on some of the most intimate affairs of the general population and it should not be shrouded behind legalese or issues of legal access; it should be as accessible as possible.
Having said that, I support the bill. It sits comfortably in the western European tradition of economic affairs taking place in an organised setting, and trusts and clearly defined rules on inheritance and succession have been a part of Scottish life for centuries. Today, many people across Scotland are either connected to a trust or are themselves trustees, and matters of inheritance and succession are dealt with across Scotland on a daily basis. That shows that, although this is a largely technical piece of legislation, it is an important one for many Scots.
To go back to the point that Stephen Kerr made about ensuring that the process is as accessible as possible, an example from criminal law of something that is not accessible is the idea of the “not proven” verdict. Sheriffs and judges are not allowed to explain the implications of a “not proven” verdict. That is the reason why I changed my mind on its abolition. If we cannot explain a principle of law to the public, it is not accessible. It is important that we make the area that the bill deals with as accessible as possible.
As has been said before, the main piece of existing legislation on trusts dates back to 1921, making the law effectively more than 100 years old. Of course, the language in the 1921 act is challenging and outdated, but the numerous amendments to the legislation since then make it immensely challenging for trust creators, trustees and other beneficiaries to understand their rights and responsibilities in the system. To put it simply, our society has changed, but our trust laws have struggled to change with it.
Let us not forget that trusts are not only about financial matters but are used extensively by charitable organisations and pension funds. They can be used to protect and administer assets on behalf of vulnerable people and to streamline business operations by setting funds aside to deal with potential future liabilities. In an ever-changing world, therefore, trust law must be robust, adaptable and, above all, comprehensible, as well as accessible.
Accordingly, one of the main purposes of the bill is to modernise, centralise and clarify the rules on trusts in Scotland by creating a single accessible statute that will ensure that individuals and professionals can navigate the law on trusts with confidence. In short, the bill offers the Parliament an opportunity to make the lives of everyday Scots just that bit easier.
However, the bill is not only about updating the law on trusts. It is also about modernising and clarifying the rules on succession and inheritance. Just for the record, I am totally opposed to the proposed changes to inheritance tax that the UK Government is currently talking about.
Inheritance is primarily a matter for families and relationships, and, just as the role of trusts has changed since 1921, so, too, have many of the societal norms relating to families and relationships. The bill, therefore, aims to update the law on succession in line with those societal changes, and the proposed simplification to succession rules is a testament to that. We recognise the changing role of spouses and civil partners in our society, and it is important, therefore, that the law should acknowledge them as key members of the deceased’s family in the new definitive statute that the bill proposes. Further to that, the bill also proposes a more equitable approach to biological children, adopted children and stepchildren in the event of the death of a parent, which is also a much-needed change.
The bill is the product of two large-scale law reform projects that were undertaken by the Scottish Law Commission in a process that has spanned more than a decade and involved extensive consultations, discussions and reports. Its aim is clear: it is to ensure that our Scottish law on trusts and succession is coherent and adaptable to the modern world.
In conclusion, I say that the bill is a significant piece of legislation that updates our legal framework for the needs of our modern society and makes it readily accessible to the public. It simplifies trust laws, ensures clarity for stakeholders and acknowledges the changing dynamics of our families. Therefore, I urge all my fellow parliamentarians to support the bill, recognising that its passage will benefit not just us today, but generations still to come.
16:18
As a point of clarification, I declare that I am a trustee of a charity—one that is not based in Scotland—although I receive no remuneration for that.
It is a great pleasure to follow Keith Brown, who, of course, sailed this bill into the Parliament in 2022, and I endorse much of what he has said.
I would like to take the relatively short time that I have to discuss the interface between charities and the bill, particularly with regard to trusts, rather than the succession element.
Trusts are a vehicle that charities frequently use. There is a significant number of charitable trustees across Scotland, many of them volunteers, as was pointed out by the convener of the Delegated Powers and Law Reform Committee—on that point, I express my admiration for the convener and the committee members for the work that they have done, and, in particular, the preparation of the report.
There are some fundamental pieces of legislation on charities. The Charities (Regulation and Administration) (Scotland) Act 2023, which is the most recent, came about when the committee was overseeing the Trusts and Succession (Scotland) Bill. I have questions about the interplay between charities and the bill and the consideration that is being given to that, which I hope the minister can answer. I have questions because, at this time, the role and responsibilities of charities, particularly with the economic crisis that so many people face—I am thinking about the roles of our food banks and groups that are built into our communities that help and support people—are ever increasing. We should look forward to that and celebrate it, but most of all we should support it. That hints at my concern relating to the present legislation. I am concerned not about what the proposed legislation would say, but more about the explanation.
The metaphor has been given that the legislation on charities and the Trusts and Succession (Scotland) Bill are railway tracks that run parallel. However, I am not convinced. Indeed, from some of the evidence that the committee heard, there are others outside the Parliament who are not convinced that that is a perfect parallel. Different language is used in each of them. We have heard about the origins of the trust legislation over 100 years ago. The passage of time means that descriptions are often different between them. There is the potential of risk in those minutiae, particularly for our charitable trustees.
I very much welcome the minister’s response to the committee’s stage 1 report, particularly regarding paragraphs 102 and 103. I see that the Government is going to expand on the explanatory note to meet the committee’s request for a better explanation of how the various powers that sit within the Office of the Scottish Charity Regulator, the two principal charity acts in Scotland and the bill will interact. That is an incredibly useful proposal to make. We may be able to tease out from that any potential challenges that could come down the line.
I am slightly more disappointed by the Government’s response to paragraph 103, which states:
“The Committee requests an update from the Scottish Government on how the provisions of the Charities (Regulation and Administration) (Scotland) Act 2023 interact with those of the Bill.”
There is a very strong description, which I understand and value, of OSCR and its powers to appoint trustees in emergency situations, but there is the potential for a challenge there. I fully support the principles of the bill, but I seek an undertaking from the minister in winding up that that will be looked at and that we will be able to see evidence of the work that is done. I think that that would reassure a significant number of charities.
I recognise that time is tight. I welcome the work that has been done, and I thank the Deputy Presiding Officer for his patience.
16:23
First, I thank the committee for the considered and detailed work that it has carried out at stage 1, which has sought to update us on two important areas of Scottish life: the management and administration of trusts, and the law as it relates to succession.
I want to focus on part 2 of the bill, which relates to succession, and to share with the Parliament some views on the benefits of the proposals relating to the rights of spouses and civil partners and what was and still is an area in which a lack of clarity remains with respect to the appointment of executors of a deceased person’s estate.
On the proposals concerning how to deal with intestate succession, or the problem of what happens when a person dies without leaving a will, currently the range of beneficiaries is spouses or civil partners, children and remoter descendants, such as grandchildren, and even the parents of the deceased. As I understand it, section 72 of the bill proposes that the spouse or civil partner will become top of the statutory list of those entitled to inherit the free estate. That proposal seems to have been met with agreement from all those who were consulted, and it appears to be uncontested. If that proposal goes forward in the final version of the bill, I am sure that that will be broadly welcomed.
An issue arose in relation to the complexities that might arise in dealing with separated partners. The Government suggests that there remains the ability of a partner to change their will, and it does not see the need to alter the legislation in that respect, despite the discussion that occurred in the committee.
A word of caution in the succession debate is on the fact that cohabitants are not part of the suite of possible inheritors and must apply separately to the court to be considered as beneficiaries. That can be done, but it requires court action by an individual. Perhaps all of that strengthens Stephen Kerr’s advice that people should make a will.
An important issue that the committee discussed and on which further work is probably required is that unlawful killers can become executors of a deceased person’s estate. I know only too well from constituency casework of the anguish that is brought to a family when the person who murdered their loved one becomes the executor of the estate. A murderer cannot benefit directly from such an act, but being an executor is a separate matter, and their involvement can at the very least cause prolonged delay and at worst involve a refusal to dispose of the estate.
An application can be made to the court to remove executors, but we all know that that can be extremely costly and usually does not proceed. I am therefore pleased that the Government is committed to bringing forward the necessary reforms to prevent a person who is convicted of murder from being an executor of their victim’s estate.
Mr Coffey will recognise the challenge that exists under the present law and in the future. If somebody was a trustee before they were convicted, they would still be a trustee. We must balance what we all want to happen to protect trusts and their beneficiaries with the presumption of innocence until proven guilty.
The committee’s convener has explained how tricky and difficult the matter still remains, but I am pleased that the Government is working on it. I hope that we will see that coming through at stages 2 and 3.
I hope that the bill will prevent any circumstances from arising in which a murderer can indirectly benefit from the future sale of his victim’s property. Dealing with that is crucial. Whether that can be achieved within the bill’s timescales is not clear, and perhaps the minister can say a little more about that in summing up.
In winding up in this short debate, I will finish with a positive comment on the careful consideration that has been given to the issues that the committee has highlighted. The issues are not as straightforward as they might seem to some—perhaps the 100 years or so that have passed with no changes to some aspects attest to that. However, I hope that it will not be another 100 years before we see some of the positive changes coming into effect and a resolution to the awful circumstances that I just outlined. I wish the committee every success as it considers those important issues at stages 2 and 3.
16:28
I thank the Scottish Law Commission for its detailed work over more than a decade on the bill’s different elements. I am also grateful to the Delegated Powers and Law Reform Committee for its consideration of the proposals over the past few months. The evidence that it gathered in the stage 1 report has been useful to me as I have tried to get my head around at least some of what is in the bill.
Scottish Greens welcome the bill. As we have heard, it is a technical bill that seeks to deal with the complexities that more than 100 years of acts, amendments and the like have created. It is intended to ensure that our laws on trusts and succession are clear, coherent and able to respond appropriately to contemporary and—hopefully—future conditions and requirements. The bill should make it easier for solicitors and—perhaps more important—for trusters, trustees and beneficiaries to understand their legal rights and duties. Among other things, the bill clarifies the rights of spouses or civil partners of people who die without having written a will.
Over the coming stages of the bill, I will watch several things with interest, including areas that witnesses said need clarification or amendment, uncertainties about how the bill will interact with charity law and concerns about pension scheme trusts, among others. I welcome the committee’s recommendation that the Scottish and UK Governments should pursue the timely implementation of a section 104 order to ensure that commencement of the bill is not delayed.
I will say a couple of things about issues that the bill does not cover. Although those issues are probably out of scope at the moment, I hope that the committee will have them in mind as the bill progresses through the next stages, to see whether there are things that can be considered, or at least to set the foundations for future work.
I note the minister’s comments in her opening statement about the further work that should be possible to ensure that trusts support positive environmental and social objectives to enhance our environment and community wellbeing. I am grateful for those comments and look forward to developments in those areas.
Specifically on land-holding trusts, Scottish Greens believe that offshore trusts, blind trusts and private trusts that exist for tax avoidance or ownership secrecy should be prohibited from holding land. Further, primary beneficiaries of land-holding trusts should demonstrate the productive use or development of land for good, while being locally accountable and accessible.
We must also ensure that our succession laws support our intentions and principles around collective benefit and fair inheritance of landholdings practices and do not contribute further to Scotland’s land problem. Many of us in the chamber are concerned about the historical inequalities that are embedded in the structures and concentrated patterns of land ownership. We must not forget the powers within succession laws as we look to further land reform for community benefit.
I realise that those points are perhaps beyond the technical parameters of the Trusts and Succession (Scotland) Bill that we discuss today. However, I hope that the DPLR Committee will have those points in mind in the coming months.
I thank the Law Society and all others for their contributions to Parliament’s scrutiny and debate of the bill to date, and I wish the DPLR Committee well as it continues its work on this important legislation.
I call Emma Harper, who is the final speaker in the open debate.
16:31
I welcome the stage 1 debate. I wish Oliver Mundell a swift recovery and I hope that he feels better soon. I also thank the DPLR Committee, the clerks and all others for their input so far.
Scots trust law is widely considered to be out of date, and the main legislation is now just over a century old—it dates back to 1921. Trust law is widely understood, including by the legal profession, to be complex, difficult to understand, cumbersome and opaque. Therefore, I welcome the fact that the bill will simplify trust legislation, making the process easier, simpler and more accessible—which members have already talked about—for all who are involved.
The bill will bring the current legislation into the 21st century. In a modern society, trusts are used as solutions in an incredibly wide variety of situations. They are used extensively by charities and pension funds, as others have mentioned, in commercial transactions to set funds aside to deal with future liabilities, and in individual estate planning.
Trusts are also used to protect and administer assets on behalf of vulnerable people such as children and adults with incapacity and disabilities. As I know through my casework, trusts are also important to look after community assets and funds, as well as for matters that might not automatically spring to mind. For instance, one of my constituents told me about the importance of the bill for her—she and her husband use a trust to secure financial assets for their child, who is in the custodial estate. That relates to Keith Brown’s point about vulnerable people.
Trusts are, indeed, hugely important, but the state of trust law in Scotland at present is inaccessible and off-putting. People who have had experience of those difficulties are reluctant to create new trusts, even if a trust represents the best option to provide the flexibility and protection that they seek. As reported by the Law Society of Scotland, that inertia around trusts in Scotland is putting Scotland at a disadvantage, in contrast to other European nations and other parts of the UK.
The Scottish Law Commission, the Law Society of Scotland and practitioners have commented on all those issues throughout the various consultations that led to the bill. Indeed, I echo the comments of Lady Paton of the inner house of the Court Session, who said:
“There will be considerable rejoicing and relief amongst the legal community who deal with clients and find the 100-year-old law a major handicap.”
Therefore, we are moving in the right direction with the bill.
As a healthcare professional and a member of the Health, Social Care and Sport Committee, I am particularly interested in the provisions of the bill in relation to incapacity. Under section 3 of the 1921 act, all trusts are held to include a provision that decisions must be made by quorum, which is defined as
“a majority of the trustees accepting and surviving”.
However, that does not include incapax trustees. That can lead to issues where trust decisions cannot be made if a majority cannot be achieved. The bill addresses that, and a definition of “incapable” is included in the bill at section 75. It closely reflects the Adults with Incapacity (Scotland) Act 2000, which refers to whether a person is capable of making, communicating, understanding and
“retaining the memory of decisions”.
In addition, section 12 of the bill states that trustees’ decisions are to be made
“by a majority of those for the time being able to make”
them, and that
“a trustee is not to be regarded as able to make a decision who ... is incapable”.
That therefore means that capacity can be determined on a decision-specific basis, allowing incapax trustees to continue as trustees and to participate where appropriate without hindering the administration of the trust.
I appreciate the minister’s comments regarding incapacity and the commitment to look further at the issue of capacity or incapacity to prevent abuse.
The bill will improve Scots law in relation to trusts, and I urge members to support it at decision time.
16:36
I thank all members who have contributed to the debate. It has been peppered throughout with clarion calls for clarity in our law in this area. There has been unanimity around the chamber on that.
This area of law—the legal devices by which, for example, estates are passed on—is important to many people across Scotland. Many people place property or assets in trusts without any real clarity as to whether that is necessary. Doing so incurs considerable cost, and the law is far from clear at the moment about whether that is a step that they should take. Therefore, emerging clarity in this area would be welcomed by many people for the purposes of making good law and the better ends to which Maggie Chapman alluded in her speech.
Stuart McMillan started his speech by telling us just how many people and institutions the bill will touch on. In his intervention on Stuart McMillan, Stephen Kerr made a very reasonable point when he asked about the full codification of trust law. The point was made partly on behalf of the Law Society of Scotland, which has called for codification. I am not entirely sure that I agree with the principal objection that it would take a lot of time to act on that call. For example, we have a debate next week on protecting this Parliament, which will take up a considerable amount of chamber time but is nothing more than political point scoring and posturing ahead of a by-election. The delay in this work is rather indefensible—it cannot be defended by referring to chamber time.
I am aware that the bill involved a considerable amount of work in the background from a lot of different institutions. People who use trust law have waited a century for it to be reformed, so it would be worth considering whether a slightly longer delay might result in a better outcome. We have had 16 years of this Government.
Oliver Mundell stood by my colleague Martin Whitfield’s concerns about the clarification that we want to see between trusts and charities. It is difficult to see how the issue might be fully resolved without the full codification that the Law Society of Scotland is looking for. I would appreciate it if the minister could work on Martin Whitfield’s suggestion of prioritising definitions as a useful step in resolving the confusion.
There is also a broader point to be made about the legislation, the work of Government that people are elected to do and our holding them to account as a Parliament. As I stated in my opening remarks, the Scottish Law Commission deserves recognition for the wide body of work that it has produced, but it deserves more than that—it deserves the work to be acted on.
The commission could be forgiven for being more than a little frustrated at the number of reports and draft bills that it has published that sit gathering dust on a shelf in St Andrew’s house. Part 1 of the bill that we are debating is based on a Scottish Law Commission report from 2014 and a revised draft bill from 2018. The reforms contained in part 2 are the fruit of law reform work and public consultation spanning more than 30 years, while the bill’s main recommendations were contained in a 2009 report on succession from the Scottish Law Commission—indeed, the Scottish Government consulted on those recommendations back in 2015.
Does Michael Marra welcome the comments from the Minister for Parliamentary Business at the Delegated Powers and Law Reform Committee on Tuesday, and from the First Minister at the Conveners Group yesterday, in which they both gave the commitment that more SLC bills would come to the Parliament?
I certainly welcome that commitment. It is belated and has been a long time coming. I will come on to why I think that this area is particularly important. To be frank, it is good to see the Government spend more of its time on the job of governing—the more of that we can have, the better. We believe that it is a good thing that the Government is keeping the commitment to implementing some of the recommendations. We only wish that it had not taken quite so long.
Back in 2021, the Delegated Powers and Law Reform Committee raised the slow rate of progress with the Minister for Parliamentary Business. At that time, there were around 18 Scottish Law Commission reports, going back as far as 2006, on which no legislation had been passed at all.
There has, of course, been some progress. The Moveable Transactions (Scotland) Bill, which passed into law earlier this year, is a good example. Although I am pleased to see in the programme for government that one of the 14 bills to be introduced in 2023-24 is a Scottish Law Commission bill, a rate of one bill per year is hardly making significant roads into the backlog.
The reason for that pace is clear. For too long, the Government has been interested more in the work of grievance than in the work of governance. I doubt that this bill, when it passes into legislation, will earn the First Minister or his Government a front-page splash. A functioning legal system that governs such areas as the bill covers is critical to one of what we are told are the key drivers of this Government. A proper growing economy requires a stable, working and interpretable legal system through which people can govern their own affairs. That is the hard work of governing.
We have a chance with the bill to make some people’s lives better—for example, the parents using a trust to provide for an adult child who cannot provide for themselves, the bereaved spouse who is spared the burden of financial uncertainty, and the trustees of a charity who find it that bit easier to administer funds and help those in need. Those people are not asking their Government for headline-grabbing high-stakes legislation with 11th hour votes and controversies; they are asking for competence, compassion and dignity. They are asking for a serious and hard-working Government.
16:42
I thank all the members who have taken part in the debate. I also thank the Law Commission, the clerks to the committee and those who gave evidence to the committee for all that they put before us.
As Oliver Mundell said in his speech, the Scottish Conservatives will support the bill at stage 1. However, a lot of work needs to be done at stages 2 and 3. The Scottish Government still has a lot of heavy lifting to do.
I absolutely agree that trust law needs to be changed. There cannot be any other area of law in which my grandfather, my father and I were taught the same thing at university. That it is three or four generations old shows that it is time for reform.
I am disappointed by the Government’s response on succession law. There is general agreement, both in the legal profession and in academia, that it is just tinkering with the system. This was an opportunity to make major reforms in succession law, but, for whatever reason, the Scottish Government has decided not to take that opportunity. The minister, in her response to the committee report, has said that there will be no further changes to succession law during this parliamentary session. I fully accept that to change succession law would be controversial and that there is no major agreement out there. However, the role of Government is, surely, to lead, and this was an opportunity for us to reform succession law to bring it into the 21st century. Instead, we are tinkering at its edges and simply introducing changes in two areas instead of having a major reform. That is a disappointment.
I do not know whether Jeremy Balfour will have a great answer to this. I have listened to him telling the chamber for some time that we are not doing enough and that we are just tinkering. What does the member want in the bill and why has he not lodged amendments on that?
Well, this is stage 1; stage 2 is still to come. I encourage Alasdair Allan to read the evidence that was given to the committee—in particular, that from the professors of law from the University of Dundee. The issue that I have is that succession law needs to be brought into the 21st century, but that is simply not happening. If the member looks at what has been said by both the Scottish Law Commission and the academics, it is absolutely clear.
Bob Doris (Glasgow Maryhill and Springburn) (SNP) rose—
In no way am I defending the Scottish Government’s choices, but the situation has come about because particular provisions exist in the standing orders for Scottish Law Commission bills, in that if the bill matches certain criteria—interestingly, one of which is that it will not generate substantial controversy—it proceeds in a different and, one would hope, more streamlined way. That is not to take away from the valid points that might need to be considered, but the bill is perhaps not the vehicle through which we would expect that to happen.
That is an interesting question for debate. However, it is clear that succession law needs to be reformed, that the Government has had 14 years to do so, that it had an opportunity either in this bill or in other legislation to introduce that reform, and that it has told us that it will not touch the matter for another two and half years at least.
I move on to trust law. We need to seek clarification on, and to have amendments in, a number of areas, as the bill goes through Parliament. First, there is a danger—a number of members have pointed to this—that we will put people off becoming trustees. Evidence is already out there that it is becoming harder to find people to be trustees and to do that work for certain trusts—especially for small trusts, which play a really important role in communities. We have to be careful that we do not put people off; the perception is—it is, perhaps, just a perception—that one could face financial problems if one were to become a trustee. It would be helpful for the minister to lodge amendments to clarify that point at stage 2.
Secondly, there is an area with which all members of the committee have struggled. We need to think more about the definition of “incapacity”—the Government is already thinking about it and there is no clear way forward. Emma Harper and Oliver Mundell raised that issue in the debate. We have to be really careful and confident that whatever definition we ultimately come to, as a Parliament, will meet not just the lawyers’ needs but the needs of trustees, particularly trustees of small trusts, who do not want to keep going to lawyers.
Mr Balfour will agree that the committee considered future proofing of the definition and thinks that some type of delegated-power mechanism would help with that.
I agree with Mr McMillan that that might be a way forward, but—again—it is something that we will have to look at.
I agree with Mr Kerr to some degree that people should be making a will. However, I remind Mr Kerr of a great advert that the Law Society brought out in the 1990s, which said that
“It’s never too early to call your solicitor.”
Obviously, that is seen to be true today.
We have to ensure that the language is not good only for lawyers, but is also good for the people who work on trusts day in and day out, so that we do not get caught out. If we can avoid lawyers being involved in things, that can only be good news.
I agree with Martin Whitfield on the concern that he raised about the interplay between trusts and charities. I asked a number of questions about that of the expert witnesses. Again, we need to be clear in our thinking about how we are going to proceed on that.
Finally, we need to look again at codification, which was raised by Mr Kerr and Mr Whitfield. We have waited 100 years for the bill, so we could probably wait just a wee bit longer. If the minister is simply concerned about time, I think that we could pause to do that. If there is a more substantial reason why she thinks that that is not possible, I would be interested to hear it.
The bill is long overdue. It will be welcomed by civic society and the legal profession, so I look forward to voting for it at stage 1 tonight.
On a point of order, Presiding Officer.
Martin Whitfield made a declaration of interests during his speech. I should also have made a declaration of interests, as I am a trustee of a human rights charity that is registered in England. I want to put that on the record, in case there are any doubts.
Thank you, Mr Kerr. Although that was not a point of order, it is now on the record.
I call the minister to wind up the debate. You have until 5 pm, minister.
16:51
I thank members for their contribution to this afternoon’s helpful debate. I would also like to repeat my thanks to the Scottish Law Commission for the decade of work that has gone into this reform project and the Delegated Powers and Law Reform Committee for the work that it has done on gathering and listening to the evidence on the bill and for its recommendations.
In general, the bill covers the powers and duties of trustees, the administration of trusts and the powers of the courts in trust matters, and it has one substantive provision on succession. The majority of the current statutory framework relating to trust law is found in the Trusts (Scotland) Act 1921. In modern trust practice, the powers and duties of trustees are markedly different from those set out in the 1921 act. The part that is played by the trust in commercial structures, for instance, means that trust law is of economic importance: trusts are widely used for investment and financial planning. Other examples of the use of trusts include supporting those who are unable to manage their own affairs because they are, for example, under age or they have a disability, to ring fence funds to ensure consumer protection, such as travel companies holding funds provided for holidays, or to hold business or other assets rather than fragmenting ownership.
Current legislation has not kept up with how trusts are now used and the bill represents a significant step in bringing the law up to date, and making it easier for trusters, trustees or beneficiaries to understand what their legal rights and duties are. The SLC’s reform project is the most significant review of the Scots law of trust in the past 100 years, and the bill implements the overwhelming number of recommendations made by it.
Overall, the SLC’s recommendations achieve the aim of modernising trust law, but committee members and members who are here today have identified some points of detail where they consider that improvements can be made to the bill. Although there are these points of debate, I am pleased that there is broad support across the chamber for the general principles of the bill.
Will the minister take an intervention?
I am sorry, Mr Kerr, but I have a lot to get on with.
I have listened to each of the points raised by the committee carefully and I will of course take them away and reflect on them before stage 2. I am willing to listen to and, where I can, work with members across the chamber on the bill.
Several members brought up codification. Complete codification of any area of law is never straightforward. The SLC considered the codification of the law but ultimately rejected it. As Lord Drummond Young told the committee, its view was that some areas of the law were better left out of statute, such as that somewhat abstract dual patrimony theory that underpins trusts and the law around express trusts or implied trusts.
The bill reforms all the parts of Scots trust law that have traditionally been dealt with by statute. It consolidates and modernises nearly all of statutory trust law. I am content that the SLC, after extensive consideration of the issue, has identified the right approach to the bill, which is one of focusing on reforming the parts of the law that create problems in practice. I understand the committee’s view that a comprehensive codification would make it easier for a layperson to access and understand the legislation, but as the SLC suggested in evidence, in other jurisdictions where codification has taken place, the statutory law is seldom absolutely comprehensive.
I move on to the issue of section 104 of the Scotland Act 1998, which several members raised. It is critically important that the bill does not leave pension trusts behind. That is why our preferred route to achieving maximum certainty is to work with the UK Government to bring forward an order under section 104 of the Scotland Act 1998 that would apply the bill to pension trusts. We have had positive engagement with officials at the Scotland Office and other UK Government departments, and we are making progress on taking forward a section 104 order. We are at a really early stage of the process, but I will update the committee as and when the situation develops.
Oliver Mundell touched on litigation expenses. Currently, it is usually the case that trustees are personally liable to pay litigation expenses to successful opponents, but they have the right of relief against a trust estate. I have listened to the concerns that the Law Society, in particular, has raised about the potential effect of the relevant provisions. My officials met the Law Society and STEP over the summer to hear directly from them. I will look into the matter again and will consider how we might best deal with the concerns that have been raised by some of the professions.
Willie Coffey raised the emotive issue of murderers as executors. I am committed to introducing reform that would prevent a person who has been convicted of murder from being an executor for their victim’s estate. My officials and I will continue to explore what can be done in the context of the bill to ensure that that happens.
I turn to the definition of “incapacity”, which several members raised. The bill uses a familiar definition of “incapable” that is very similar—although not identical—to the one that is found in the Adults with Incapacity (Scotland) Act 2000. The committee has rightly pointed out that significant and far-reaching changes to mental health legislation have been recommended, and I agree that it would clearly be undesirable for the meaning of “incapable” in trust law to differ from the usual widely understood definition. I can see merit in ensuring that the bill does not diverge from the general law on capacity and that it will keep pace with any changes in the area. I am considering the best approach, with a view to lodging an amendment on the issue at stage 2.
Stephen Kerr made a very important point, which I fully endorse, when he stressed the importance of making a will. That is the only way for us to ensure that our money, our property, our possessions and our investments go to the people we really care about.
Would the minister be minded to consider whether we could have a fundamental change in the way in which properties are registered, whereby it would be necessary to have a notarised will so that the disposal of a property in the event of the death of the owner would be wound up in the whole transaction?
That could be something that we could consider, but it will not be considered in relation to the bill before us.
I believe that today’s debate reinforces the impression that there is broad support for the bill and its policy aims. This is Parliament’s chance to consider an area of law that has not been looked at in any substantial way for more than 100 years. As a whole, the bill seeks to bring the law into line with modern practice, and it takes forward all the substantive recommendations for reform proposed by the SLC.
I thank all the members who have contributed to today’s debate, and I welcome their broad support for the general principles of the bill. However, as the debate has demonstrated, there are matters to consider and some differences of view on some points of detail. I have committed to writing to the committee ahead of stage 2 to provide the further information that it has requested. I look forward to working with the committee and members from across the chamber to consider those issues in the coming weeks.
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