The Scottish Parliament has announced that the Trusts and Succession (Scotland) Bill has come into effect as of 30 January 2024. The aim of the Bill is to change the law regarding the management and administration of trusts, as well as the operation of succession and who has the right to inherit and in what order.

Private Client analysis: On 20 December 2023 the Trusts and Succession (Scotland) Bill was passed and on 30 January 2024 the Bill received Royal Assent. Joseph Slane, Associate at Turcan Connell and Yvonne Evans, Senior Lecturer in Law at the University of Dundee discuss the key changes relating to trust and succession law that are being introduced by the Trusts and Succession (Scotland) Act 2024 (TS(S)A 2024 or the Act). They also consider whether the Act introduces all the Scottish Law Commission’s recommendations and the expected timescale for the implementation of these changes.

Introduction Many trusts own shares as part of a portfolio of investments. This Practice Note looks at situations where trustees own shares in order to achieve some other commercial purpose. Such trusts fall into two main categories: • where the intention is to centralise management and possibly voting rights in the shares while maintaining the economic rights of the beneficiaries. These trusts will usually be bare trusts, and • trusts where the aim is to hold shares in order to benefit beneficiaries at some future time and possibly on a discretionary basis. Such trusts will generally be settlements for tax purposes Voting trusts A voting trust will often be used in conjunction with a shareholders' agreement so that the arrangement is part trust and part contractual. The trust/contract can operate in a number of different ways. For example, in Booth v Ellard, a number of family members placed their shares in the family company into a trust before the anticipated disposal of the company. Initially, a family member could

FORTHCOMING CHANGE: The Trusts and Succession (Scotland) Act 2024 received Royal Assent on 30 January 2024, marking the first review of trusts law in Scotland in over 100 years since the principal legislation, the Trusts (Scotland) Act 1921, was passed. The trusts provisions require secondary legislation from Scottish Ministers to be brought into force whereas some provisions relating to succession law came into effect on 30 April 2024. The main changes to modernise the law are summarised in News Analysis: Trusts and Succession (Scotland) Bill passed. Practice Notes on areas of Scottish trusts and succession law will be updated further to reflect this new legislation. What is a trust for (or with) a vulnerable beneficiary? A trust for a vulnerable beneficiary will fall into one of two categories: • a disabled person's trust; or • a trust for a bereaved minor (referred to as ‘relevant minors’ in statutory provision) A trust that meets the conditions for both will be treated as a disabled person's trust, which will allow it to continue

This Practice Note is produced in partnership with Shafaq Sadiq of Wedlake Bell. The concept of ‘giving and helping’ is a core principle in Islam as it is an act which greatly pleases Allah Subhanahu Wa Ta'ala (swt—The most glorified, the most high). The Islamic institution known as the ‘Waqf’ provides the mechanism to give away wealth for charitable or religious purposes. It is considered a very noble practice and is encouraged by Islamic law. It also acts as a means for family wealth management providing financial stability to the donor's family during their lifetime or after their death. Waqf The core concept of the Waqf is sustainability to ensure ongoing charitable endowment. The word Waqf is derived from the Arabic word 'Waqafa' which means to bring to a standstill or to hold. This means that the ownership ceases by handing over the property in its entirety to Allah swt. Waqf is a distinctive instrument in Islam. There is no specific verse in the Quran on the concept of Waqf; however there are numerous verses

There are broadly two situations in which trusts are encountered in relation to commercial transactions: • express trusts, ie a trust which has been created as the vehicle or structure through which individuals can participate in a transaction or arrangement, or • imposed trusts (eg a resulting trust or a remedial constructive trust) which are imposed by operation of law as a device for providing a participant in a transaction with a remedy following a breach of duty by a trustee or by a third party, or to prevent injustice General issues Where an express trust is being used as the vehicle for implementing a commercial transaction, it is imperative that you understand: • who the present trustees are (for which you will need to examine the trust document and any deeds of retirement, removal or appointment of trustees) • the extent of their express or statutory powers (in addition to examining the trust document, you will need to consider the provisions of a wide-range of statutes, some of which are discussed below) • the duration

This Practice Note considers the key procedural aspects of family proceedings involving trust assets, including the issue and service of proceedings. It also sets out steps to be taken to join either a trustee or a third-party beneficiary to the proceedings, together with evidential issues and the court’s powers to compel a person who is not a party to provide disclosure. Initial considerations Where either party has an interest in a trust, the applications issued and subsequent procedure will depend on the circumstances of the case, which will determine which of the three main approaches to trust assets is to be adopted, being: • consideration may be given to treating trust assets as a resource available to one of the parties—see Practice Note: Introduction to trusts within financial proceedings—Trusts as a financial resource • the court may exercise its power to make a variation of settlement order under section 24(1)(c) of the Matrimonial Causes Act 1973 (MCA 1973) or its Civil Partnership Act 2004 (CPA 2004) equivalent—see Practice Note: Trusts—variation of

The Trusts of Land and Appointment of Trustees Act 1996 (TOLATA 1996) came into force on 1 January 1997. Under it: • the trust for sale is replaced by the trust of land • the doctrine of conversion is abolished • both the trustees and the beneficiaries are given additional powers and rights in relation to the trust property • the court is given enhanced powers to make orders in relation to the trust • the beneficiaries are given powers to remove and appoint new trustees Trusts of land Any trust (express, implied, resulting or constructive) which includes land as part of the trust property is a ‘trust of land’; this includes a trust for sale and a bare trust. This applies to all such trusts irrespective of when they were created, unless the land is ‘settled land’ within the meaning of the Settled Land Act 1925 (SLA 1925). However, TOLATA 1996 provides that any trust created after 1 January 1997 cannot be an SLA 1925 settlement unless it is created

Property analysis: The court would not imply into a simple declaration of trust to hold property as tenants in common, a common intention to grant a 999–year lease to one of the co-owners who was an existing tenant in the building following a collective enfranchisement.

Part 7 or Part 8? Prior to April 2007, the practice direction to CPR 8 provided that where before 26 April 1999, a claim in the High Court was begun by an originating summons, that claim should be issued under the Part 8 procedure. Claims under the Trusts of Land and Appointment of Trustees Act 1996 (TOLATA 1996) were, prior to 26 April 1999, begun by originating summons so it was previously thought that the Part 8 procedure was the correct procedure. The present practice direction to Part 8 instead lists those claims that may be commenced using the Part 8 procedure, which does not include claims under TOLATA 1996. Claims should therefore be issued under the Part 7 procedure unless there is unlikely to be any substantial dispute of fact or a rule or practice direction requires or permits use of the Part 8 procedure. If the dispute concerns the extent of a party's beneficial interest in property, it will likely involve a factual dispute. The Part 8 procedure is intended to determine issues

Under the provisions of section 14 of the Trusts of Land and Appointment of Trustees Act 1996 (TOLATA 1996), the court is able to make orders: • relating to the exercise by the trustees of any of their functions, including an order relieving them of any obligation to obtain the consent of or consult with any person in connection with the exercise of any of their functions, or • declaring the nature or extent of a person's interest in property subject to the trust While TOLATA 1996, s 6 provides the trustees of a trust of land with the powers of an absolute owner (subject to restrictions as to consultation, consent and occupation), the court has all the powers of an absolute owner but without the restrictions attached to trustees. However, the court may not alter the beneficial interests that exist, nor make an order for the removal or appointment of trustees. Pre-Action Conduct and Protocols There is no specific pre-action protocol relating to claims under TOLATA 1996 but the parties should have regard to Practice

This Practice Note sets out considerations and practical steps to be taken when dealing with enforcement in relation to trusts within family proceedings, including offshore trusts and the approach offshore trustees may take where orders are made in this jurisdiction. It considers enforcement of a variation of settlement order, exclusive jurisdiction clauses, enforcing a finding of sham or invalidity, enforcing ‘judicious encouragement’ orders and trustee submissions. The enforceability of any financial remedy order should be considered at the outset of a case involving trusts, as enforcement considerations may influence the case from the framing of the application onwards. A cost-benefit analysis should be undertaken, particularly in cases involving offshore trusts or assets. Difficulties with enforcement are less likely to arise where the trust is governed by English law and both the trustees and the assets are in England and Wales. Under Family Procedure Rules 2010 (FPR 2010), SI 2010/2955, 9.26B, a trustee may be added or removed as a party either on the court's own initiative or on the application of an existing