By the Trust and Trustees Act 2023, the Isle of Man introduced substantial reforms which bring its legislation in line with the most contemporary trust legal systems.
This is achieved through amendments to the existing trusts legislation as well as through a range of new additions to the Island’s law of trusts.
Some of the key new provisions refer to the following topics:
- Right of information: the reform provides clarity on the right of the beneficiaries to obtain information regarding the trust and describes under what circumstances a trustee may refuse to provide such information. These new provisions codify the position already set out in the case Schmidt v Rosewood.
- Power of trustee to contract with himself: the reform allows trustees to contract with themselves when acting as trustees of multiple trusts. This provision brings the law in line with the realities of the modern trust industry, where trustees often act in multiple capacities.
- Liability of trustees to third parties: the new provisions also cover the sphere of the trustee’s liability when the latter informs a third party involved in the transaction or matter, or the third party is otherwise aware, that the trustee is acting as a trustee. In these cases, any claim by the third party with respect to such transaction or matter must be made against the trustee as trustee of the trust and extends only to the property of the trust.
- Power to declare the exercise of a power voidable: the reform restores the Hastings-Bass rule on voiding trustees’ transactions. The new provisions clarify that the courts can reverse a decision whether or not the failure to consider relevant factors resulted from a lack of care or other fault of the trustee or an advisor to the trustee. No breach of duty is necessary.
Trusts law in the Isle of Man had remained close to the England and Wales tradition for well over a century. This stands in contrast with Jersey, Guernsey and various other jurisdictions, which have witnessed – and ultimately benefited from – regular and proactive developments in their own trusts’ legislation. The recent reform establishes a more clear, robust and adaptable framework for trust operations, ensuring the Isle of Man jurisdiction’s competitiveness in meeting the demands of modern trust structuring and administration.