Key Distinctions in Wills, Trusts, and Estates: Focus on Trusts in England, Wales, and Scotland

Title: Contrasting Trust Laws in England and Wales vs. Scotland

In the realm of estate planning, the nuances of trust laws can vary significantly between England and Wales and Scotland. Understanding these distinctions is crucial for individuals looking to create trusts for the benefit of their loved ones. Here are some key differences to consider:

Perpetuity Periods:
– In Scotland, trusts created for private individuals can theoretically last forever.
– In England and Wales, strict rules dictate that the interests of beneficiaries must “vest” within a specific time frame, known as the perpetuity period. For trusts created after April 6, 2010, the prescribed period is 125 years.
– Wills containing trusts executed before this date may have a shorter perpetuity period, impacting the long-term objectives of the trust.

Trustee Powers:
– Statutory powers in both jurisdictions provide tools for trustees to manage trust funds and replace trustees when necessary.
– In England and Wales, statutory powers are broader and more helpful to trustees, while in Scotland, bespoke trustee powers must be included in the trust document.
– The drafting process in England and Wales may focus more on modifying statutory powers to tailor them to the client’s needs.

Equity, Implied Trusts, and Rights of Beneficiaries:
– In England and Wales, trusts can be implied by law in certain situations where it is equitable for assets to be held for the benefit of someone who is not the legal owner.
– Beneficiaries in England and Wales have a “real” right in the trust property, enforceable against third parties.
– In Scotland, beneficiaries do not have “real” rights but can enforce their “personal” rights against trustees.

Trustee Decision-Making:
– In Scottish private trusts, decisions are generally made by majority rule.
– In England and Wales, trustees must make decisions unanimously by default, unless the trust deed specifies otherwise.

Understanding these distinctions is essential for individuals navigating estate planning in both jurisdictions. Brodies, with expertise in both English and Scottish law, is uniquely positioned to assist clients with succession matters that may span across England, Wales, and Scotland.

By: Nadine Walton, Senior Associate at Brodies

This article sheds light on the complexities of trust laws in England and Wales compared to Scotland, highlighting the importance of seeking expert advice when creating trusts for estate planning purposes.