For those who attended the STEP Isle of Man annual conference on 14 October 2022, you will have heard Isle of Man Senior Associate Erin Trimble-Cregeen, together with Partner Jared Dann from Appleby Jersey, speaking on whether or not the Isle of Man trust industry remains competitive in the current climate.
In doing so, Erin highlighted the main amendments proposed by the Trust and Trustees Bill 2022 (the Bill) from the perspective of a trust litigator before Jared compared the provisions to those existing in Jersey and Guernsey, and opened up a general discussion about whether or not the proposals made the Isle of Man more competitive.
In the week that the Bill goes for its second reading (25 October 2022), it might be helpful to recap what was considered to be the major talking points in the Bill, namely (and in very brief summary):
- Amendment of the Trustee Act 2001:
- Insertion of a new Part 1A: Duty to disclose trust
- This proposed section seeks to codify the position set out in the Manx case of Schmidt v Rosewood and provides clarity as to who may apply for trust information, and when (and in relation to what circumstances) a trustee may refuse to provide trustee information;
- Insertion of a new Part 3A: Power of trustee to
contract with himself;
- This section, if enacted, facilitates trustees contracting with themselves when acting as trustees of multiple trusts and effectively seeks to bring the law into line with the realities of the modern trust industry in this respect;
- Insertion of a new Part 4A: Liability of trustees
to third parties;
- Where a trustee is entering into a transaction with a third party as a trustee, and has informed that third party in writing that it is transacting as a trustee, then the trustee's liability is limited to the value of the trust property.
- Insertion of a new Part 1A: Duty to disclose trust information;
- Amendment of the Trustee Act 1961: Insertion of a new section
55A: Power to declare exercise of a power
- This seeks to enshrine what was previously referred to as ‘the rule in Hastings-Bass' into statute thus providing clarity to the trust industry in the Isle of Man which has been lacking since the 2013 Supreme Court decision in Pitt v Holt.
- It seeks to provide that the court may declare void or voidable a transfer or disposition where the trustee in exercising its power has failed to take relevant (and only relevant) factors into account and, but for that failure, the trustee would not have exercised the power in the way they did.
- Crucially, this power is available whether or not the failure to consider relevant (and only relevant) factors resulted from a lack of care or other fault on the part of the trustee or an advisor to the trustee; effectively, no breach of duty is necessary.
Whilst the above is a very brief overview of the proposed provisions and does not seek to go into detail about how the sections work, we consider that if the Bill is passed, it should result in the Isle of Man remaining competitive in respect of its trust legislation.
Here is a link to the Bill: Trusts and Trustees Bill 2022.
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