Chamber and committees

My apologies, Presiding Officer. I am sorry—it is my first stage 3.

A protector’s function is to ensure that the trustee of a trust is appropriately discharging their duties. Although it is almost certainly possible to provide for a protector under Scots law currently, the bill provides legal certainty on the matter.

Section 49 of the bill also provides a statutory list of example powers that a truster may confer upon protectors. Ultimately, it will be up to the truster to decide whether any particular power is conferred on any particular protector, which will depend on the individual circumstances of each case.

Having considered the drafting of the list of example powers further, and having heard further from stakeholders, I have concluded that some of the powers could be stated differently so that they are more in line with the protector’s role. Amendment 21 does that. It removes the illustrative references to protectors directing trustees as to who may enjoy a beneficial interest and, in its place, provides a more consistent approach to the list of illustrative powers that may be conferred on protectors.

I move amendment 21.

Amendment 21 agreed to.

Section 61—Alteration of trust purposes on material change in circumstances

Moved, Presiding Officer.

I thank the members of the Delegated Powers and Law Reform Committee for their thoughtful and helpful consideration of the Trusts and Succession (Scotland) Bill. I very much welcome their thorough scrutiny of the bill. I also thank the committee clerks for all their hard work and the stakeholders who contributed views and their time as part of parliamentary scrutiny.

This is a Scottish Law Commission bill, so I thank the commission for the considerable work that went into this law reform project. In particular, I thank Lord Drummond Young, who, even though he is no longer chair of the commission, has given his time generously. I know that he is in the public gallery, along with Lady Paton and Charles Garland from the commission.

The Scottish Government has had useful engagement with a number of stakeholders. My officials have met the Law Society of Scotland on several occasions, and they have met the Society of Trust and Estate Practitioners Scotland and the Office of the Scottish Charity Regulator. Those organisations’ practical experience has been especially important in helping me to reach policy decisions on the content of the bill.

Throughout the process, I have listened carefully to the views that have been expressed to the Scottish Parliament and to the committee’s views, and the bill has been amended as a result. I was happy to lodge stage 2 amendments to implement some of the committee’s thoughtful recommendations, particularly on increasing the safeguards for sole trustees, which was a particular concern that the committee raised after hearing evidence directly from trustees. I have also been pleased to support stage 2 amendments that committee members lodged, and I had helpful engagement with Jeremy Balfour on, for example, his amendment that extended—indeed, doubled—the time during which a cohabitant has the right to make a claim on the deceased cohabitant’s estate when there is no will. Today, we have agreed adjustments to other provisions to ensure that they work as intended.

The bill addresses important issues when someone has died without leaving a will, which is, unfortunately, a relatively common occurrence.

I will briefly remind the chamber of some of the bill’s key provisions and what they are intended to achieve. Most of the bill’s provisions relate to the law of trusts and can be found in part 1. The bill makes important changes to trustees’ powers. The current legislation, which dates back to 1921, no longer gives trustees the powers that they need to administer a trust effectively. That makes it difficult for trustees to comply with their paramount duty, which is to give effect to the trust’s purposes in the best interests of the beneficiaries.

An important reform is the conferral of a default general power, which replaces what is an inflexible, complex and restrictive statutory list of powers. As a result, trustees will be able to have all the powers that a competent adult has in relation to their own property.

The bill reforms the duties that are placed on trustees. Those changes better reflect the need for transparency in modern-day trusts. For example, the bill clarifies what information a beneficiary is entitled to expect or request from the trustees. The trustees’ information duties go to the heart of trust law, and the reforms enable beneficiaries to exercise their power to hold trustees to account.

The bill also makes a number of important changes to how trusts are administered, how trustees are appointed or removed and how trustees resign. Many members in the chamber may be aware—perhaps through their constituents—of the fallout from the failure of McClure Solicitors. I am pleased that, collectively, we have been able to make amendments at stages 2 and 3 to respond to the significant practical difficulties that co-trustees may have in removing a trustee who was appointed as a trustee in their professional capacity and is no longer a member of their profession.

The bill cannot resolve the wider issues that the collapse of McClure’s has caused. I know that Stuart McMillan has a keen interest in the matter, and we recently met to discuss what could be done to help those who have found themselves caught up in the situation. I welcome the engagement with him, and I look forward to working constructively with him on it.

Part 2 deals with reforms to the law of intestate succession. The bill implements a Scottish Law Commission recommendation of 2009 so that, when a person dies without a will and is survived by a spouse or civil partner but not by children, the spouse or civil partner will inherit the whole of the net intestate estate. When the Scottish Government consulted on that in 2015, there was agreement with the proposal, and the Scottish Government’s response committed to implementing the recommendation.

I am pleased that we have been able to address the issue, which, depending on the composition and size of the estate, has resulted in the bulk of the estate passing to parents or siblings rather than the surviving spouse. That is not what people expect to happen, and the bill will remedy that situation. We have also taken the opportunity to amend section 2 of the Succession (Scotland) Act 2016 to clarify the drafting so that it is not open to any unintended interpretation.

Finally, in respect of reforming the law of succession, I was pleased to lodge stage 2 amendments that addressed the unacceptable prospect of a convicted murderer continuing to act as executor of their victim’s estate. There is some uncertainty about the current position on that in Scots law, but the amendments will place it beyond any doubt that an executor who is convicted of, or is being prosecuted for, the murder or culpable homicide of the deceased will be regarded as unfit for that office and can be removed by the court, and that a sheriff must refuse any application for appointment as an executor dative in the same circumstances.

Those amendments fulfil a previous commitment that the Scottish Government made. They also implement a recommendation that the committee made, and I hope that they bring the necessary legal certainty to those who are experiencing that difficult situation. I am convinced that the bill will result in reforms to the law that will benefit all those who are involved in trusts.

I move,

That the Parliament agrees that the Trusts and Succession (Scotland) Bill be passed.

The amended section 5 provides that a sole trustee must have

“accepted office in writing”

or otherwise have

“acted in a way which indicates that they have accepted office”.

I understand that the policy intention behind the stage 2 amendment was to make sure that the office of sole trustee is not forced upon someone against their wishes. Amendment 1 provides flexibility in the way that the office can be accepted but does not fundamentally alter the policy intention. A sole trustee would still have to accept office, but that could be done verbally, in writing or by some other means.

Moving on, I support Stuart McMillan’s amendments 2 and 2A. Amendment 2, if amended by amendment 2A, will mean that, where two or more professional trustees have been appointed who are each no longer a member of the regulated profession or are not entitled to practise, when it comes to a decision to remove either of them, neither of those trustees is to be regarded as able to make the decision. That will prevent a potential and undesirable impasse.

I understand that Mr McMillan, in the light of comments from the Law Society of Scotland, has decided not to proceed with the provisions in amendment 2 that would have built on the stage 2 amendment that I lodged that allowed co-trustees to remove one of their own where the trustee being removed has been appointed in their capacity as a member of the profession but has ceased to be a member of that profession. The relevant provisions in amendment 2 would have extended that to professional trustees who provide their services through a company or partnership. I understand that, although the Law Society agrees with the principle, it has concerns about potential unintended consequences. It is therefore sensible to take more time to look at the issue, and I am happy to continue to work with Mr McMillan to consider how further changes might be made to other legislation.

Amendments 3 and 4 are in my name. A person who has been removed from office as a trustee may require to take certain actions after being removed. That might include updating information that is held in statutory registers, and failure to do so may result in criminal liability. Although I believe that, in the overwhelming majority of cases, trustees would take the sensible action of informing removed trustees of their date of removal, I understand that that would not always be the case. For example, in a small family trust, relationships between trustees might be so strained that what appears to be sensible and practical to us would not be to them.

My amendments provide a clear statutory statement that will be of assistance to professional and non-professional trustees. When a trustee is removed from office, they must be given notice of their removal as soon as is reasonably practicable after the decision is made.

I ask members to support the amendments in the group.

I move amendment 1.

No, thank you.

Amendment 7 agreed to.

One specific issue that surfaced during stage 1 proceedings concerned the use of nominees and sub-custodians in certain situations. Amendment 13 is a response to the view that section 19, as drafted, might not go far enough in capturing the ways in which trusts are used in the financial services sector. That is an extremely technical matter involving financial regulatory arrangements and how trustees can use (a) nominee custody structures and (b) sub-custodians.

My officials have been discussing the matter, but it has not been possible to reach a conclusion in time for stage 3. Clarification may nevertheless help to alleviate concerns that trustees will not be complying with trust law when they use custodian arrangements in practice. Accordingly, amendment 13 introduces a narrow power to allow Scottish ministers, by regulations, to

“specify particular circumstances which may constitute a good cause for the purpose of”

section?19(8).

The safety and wellbeing of firefighters is a priority for the Scottish Government and the Scottish Fire and Rescue Service. The service continues to make progress through its dedicated contaminants group. It has reviewed processes and procedures to ensure that the risk of contamination is minimised. That includes a review of all fire stations to ensure that they have site-specific control measures to minimise contamination.

The Scottish Fire and Rescue Service is working closely with the Fire Brigades Union and the University of Central Lancashire and is taking action across all aspects of operations to reduce exposure to contaminants, including through investment in new fire appliances and facilities. I will continue to work closely with both the Scottish Fire and Rescue Service and the FBU on that important matter, and I will carefully consider any proposals that would increase the safety and wellbeing of firefighters.

The autumn statement delivered the worst-case scenario for Scotland’s finances. The funding that it provides falls far short of what we need and makes the challenges for our budget next year even more severe. The Chancellor of the Exchequer has failed to provide the funding that is needed, with little consideration of the specific challenges that we face. That has let Scotland down on every count. Scotland needed more money for infrastructure, public services and fair pay deals. Instead, he delivered a real-terms reduction in the total block grant. The chancellor chose to make indiscriminate cuts to national insurance while depriving public services of vital funding. That shows a UK Government that has the wrong priorities at the wrong time.