Chamber and committees

No, I do not, but we will have to wait to see once we move that forwards.

With information duties, there is a balance to be struck between the interests of the trustees and those of the beneficiaries. Many of the issues that were raised about the burden placed on trustees were also raised when the policy was being developed. The SLC has considered those competing interests at some length in developing the provisions, and the information duties in the bill attempt a compromise.

I recognise that requiring trustees to inform beneficiaries or potential beneficiaries about their position under a trust could add a burden of work to trustees. However, against that, beneficiaries could have a fundamental role in a trust in holding the trustees accountable. They cannot do that if they are not properly informed.

My view is that the bill strikes an appropriate balance between the ease of administration for the trustees and enabling beneficiaries to hold them to account. Beyond that, the information duties contained in it can be tailored for individual trusts. A truster is permitted to limit the duty to provide information requested by the beneficiaries subject to certain safeguards and the bill allows for some flexibility.

The Scottish Legal Complaints Commission has said that many complaints are made because beneficiaries are not clear on what they have or do not have the right to expect. We welcome the clear provisions on the duty of trustees to pass information to the beneficiary and on what the beneficiary is entitled to expect or request.

The bill strikes an appropriate balance. However, if the committee has another view and would like to make a recommendation, we will consider it.

That is an area on which I am willing to work with the committee. Trustees are given broad investment powers that do not prohibit taking into account environmental concerns, as stakeholders have recognised. Trustees are presently required to consider the suitability of a proposed investment for the trust. That is not an instruction to maximise financial return at all costs. I am aware that the committee has heard that trustees of trusts whose purposes are the eradication of poverty would not consider it suitable to invest in tobacco, alcohol or gambling for example. Ultimately, the investment policy that the trustees should adopt must reflect the purposes of the trust as set out by the truster in the trust deed.

As I have said, the role and fundamental duty of the trustees is to implement the trust’s purposes and care is needed to ensure that the trustees, when making investment decisions, are not instructed to take into account their personal values.

I have heard the views of a wide range of stakeholders that express provision would be helpful to make clear that, when assessing the suitability of an investment for a trust, financial returns are not the only consideration that may be taken into account. For example, the environmental and social impacts could also be relevant considerations. I will consider further what could be done on the issue, and look forward to working with the committee and the SLC on the matter as the bill continues its passage through Parliament.

I will bring in Michael Paparakis to answer that question.

We took the recommendations from the Scottish Law Commission but if the committee wants to make any suggestions in its stage 1 report we would be happy to consider them and talk to the SLC.

We will look at that further and get back to the committee.

Complete codification of any area of law is never a straightforward task. The SLC considered codification of the law but ultimately rejected it. Its view, as Lord Drummond Young told the committee, was that some areas of the law are better left out of statute—for example, the somewhat abstract dual patrimony theory that underpins trusts and the law around express or implied trusts.

The bill reforms all the parts of Scots trust law that have traditionally been dealt with by statute, and it consolidates and modernises nearly all the statutory trust areas. I am content that the SLC, after extensive consideration of the issue, has identified the right approach in the bill, which focuses on reforming those parts of the law that create problems in practice.

I understand the view that comprehensive codification would make it easier for a layperson to access and understand the legislation. However, as the SLC suggested in its evidence, in other jurisdictions where codification has taken place, the statutory law is seldom absolutely comprehensive.

At this stage, no, we are not. Setting out a statutory style in primary legislation is not necessary or helpful, because, as I have said, it can become outdated and difficult to update. The original 1921 act had only two straightforward styles. A style might give the layperson a misplaced sense of confidence that their do-it-yourself trust deed is fit for purpose when that might not be the case. Style books are produced and maintained by professionals based on their experience of contemporary practice, and the SLC was right not to attempt to take on that task.

It is the Scottish Government’s view that there should be a default time period that must elapse before the proposed jurisdiction can be exercised. The 25-year limit was chosen because that section of the bill is intended to deal predominantly with long-term trusts and the problems that can arise in relation to those.

The SLC considered that 25 years provided an easily workable default route that represented a short generation. A default time limit also helps to avoid the risk that family members who are unhappy with a trust might mount an early application to have the trust’s terms altered before any material change of circumstance has occurred.

The 25-year limit cannot be extended by a truster, but a truster can shorten that limit or do away with it altogether. I have heard evidence from stakeholders on the matter and, although some have suggested that 25 years is too long, none have suggested an alternative time period.

I will consider any recommendations that the committee makes in its stage 1 report, including any alternative recommended time limit.

The Scottish Government consulted back in 2016, and the changes that will be made by the bill received the backing of an overwhelming number of consultees. I understand that the Law Society has made a drafting suggestion that, in its view, would resolve the problem that has been identified. My officials are currently considering that. However, any test could come with its own set of problems.

The committee has heard from stakeholders that certainty is an important feature of Scots succession law. The provision provides certainty, and the definition of separated spouses risks creating unwelcome uncertainty. Any definition risks—however remote some might consider the risk to be—disinheriting spouses who are living apart only because they are prevented from living together. That might include couples in which one of the spouses is in long-term care or prison. Separated spouses can already avoid that problem altogether by preparing a new will, updating their current will or preparing a separation agreement. The change that will be brought about by the bill will be limited to cases in which there is no will and no children. The suggested change would be at odds with the position under the law of succession, whereby a will that is not changed following a couple’s separation will continue to be given effect up until the parties’ divorce.

There are unanswered policy questions about the proposed alternative approach. For example, it is not clear whether a separated spouse would still inherit some of the estate—but only after the deceased’s parents or siblings—or whether the separated spouse should not inherit anything.

As I have said, my officials are considering the issue at the moment.