Following on from our previous article; An update to Isle of Man Trust Law, when we discussed the new act in bill form, the much anticipated Trusts and Trustees Act 2023 received Royal Assent on the 18 July 2023, bringing into force sections 1 and 2. The remainder of this Act came into operation by Appointed Day Order 4 December 2023.
Key changes include:
Amendment of the Trustee Act 2001:
- Insertion of a new Part 1A: Duty to disclose trust information;
This 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 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.
Amendment of the Trustee Act 1961:
- Insertion of a new section 55A: Power to declare exercise of a power voidable;
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. 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 new provisions and does not seek to go into detail about how the sections work detail we consider this Act ensures the Isle of Man remains competitive in respect of its trust legislation and creates certainty across the industry.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.