Isle of Man Trust and Trustees Act 2023 receives Royal Assent

The Isle of Man Trust and Trustees Act 2023 was signed by the Tynwald, the Manx parliament, and received Royal Assent on 18 July. Sections 1 and 2 were brought into force on passing, with the remainder to be effected by Appointed Day Order.

The Act aims to modernise the laws to provide clarity and convenience for users of Manx trusts and to stimulate greater competition in the Island’s trust sector. The changes were originally proposed in 2015 by the Regulatory and Legislative Innovation Working Group and were subject to a stakeholder consultation in August 2016.

Specifically, the new Act amends the Trustee Act 2001 in respect of trustees’ duties, powers and liabilities, the Trustee Act 1961 in respect of trustees’ powers and the powers of the court, the Limitation Act 1984 in respect of actions against trust property and the Apportionment Act 1982 in respect of entitlement to income arising under a trust.

The amendments provide for seven distinct changes to Isle of Man trusts law, as follows:

• Disclosure of trust information – to provide clarity as to who may apply for trust information and circumstances in which a trustee may refuse to provide the same, and to solidify the position as set out in the case of Schmidt v Rosewood.
• Power of trustee to contract with themselves – to facilitate the ability of a trustee to contract with themselves when acting as a trustee of multiple trusts, in line with the demands of modern trusts and industry practice.
• Liability of trustees to third parties – to limit trustee liability to the trust fund in transactions with third parties, where that third party is informed in writing that the trustee is transacting in that capacity.
• Validation of appointments where objects are excluded or take illusory shares.
• Power to declare exercise of a power voidable – to provide a power to the Court to declare void a transfer or disposition where the trustee has failed to consider relevant factors when exercising his power, and but for that failure, the trustee would not have exercised that power in that way. This codifies the rule in Hastings-Bass and provides clarity that has been lacking since the 2013 Supreme Court decision in Pitt v Holt.
• Amendment of the Limitation Act 1984 – to shorten the current six-year limitation period in which a beneficiary can bring a claim for breach of trust to three years.
• Amendment of the Apportionment Act 1982 – to enable trustees, subject to the terms of the trust, to have regard to social, ethical, governance and environmental matters including the views and values of a beneficiary in certain matters. In some instances, a trustee may apply to Court to modify a trust to permit assets to be invested in this regard where otherwise not permitted.