The Trusts and Trustees Bill 2022 Consultation

Closed 9 May 2022

Opened 11 Apr 2022

Overview

The Trust and Trustees Bill 2022

The Treasury invites comments on the draft Trusts and Trustees Bill 2022 (“the Bill”).  

The main aim of the Bill is to provide greater clarity, certainty and convenience to users of Manx trusts and local trust practitioners. It further aims to provide greater competitiveness for the Island’s trusts sector. The Bill will do this through amendments to existing trusts legislation as well as a range of new additions to the Island’s law of trusts.

Background

The modern trust, being a historically English creation with its roots dating back to the Crusades, is a regular feature across common-law jurisdictions. In addition to its traditional testamentary usage in wills and family wealth planning, the trust also plays an integral role in the finance sector.

Trusts law in the Isle of Man has for well over a century remained close to that of England and Wales.  This stands in contrast with Jersey, Guernsey and various other International Finance Centres further afield, which have witnessed – and ultimately benefited from – regular and proactive developments in their own trusts legislation to accommodate for the modern demands made of a trust.

Whilst the persuasive application of England’s voluminous and well-respected precedent has been of benefit to Manx practitioners, there is a growing consensus that the Island’s trust legislation needs updating to provide a landscape which is clearer, more competitive and more reflective of common practice in the sector.

It is worth noting that Manx practitioners are not alone in calling for an update to the English model of the trust; with the Law Commission of England and Wales set to examine the modernisation of English trusts law as part of its 13th Programme of Law Reform[1]. It is understood that this review will focus partly on measures to make the English trust model more competitive in the global market[2]

How the Bill has been developed

The Bill comprises of a set of proposals, the majority of which were originally put forward in 2015 by the Society of Trust and Estate Practitioners (“STEP”) to the Regulatory and Legislative Innovation Working Group: an industry liaison meeting featuring representative from across the Island’s finance sector. These original proposals were subject to a stakeholder consultation in August 2016.

The Treasury subsequently worked closely with internal partners and the Financial Services Authority in exploring the proposals further and preparing the policy that underpins the Bill.

In addition to this, the Treasury consulted with private sector stakeholders prior to the drafting of the Bill to ensure that the Treasury’s understanding of the relevant areas of trusts law was correct. This stakeholder engagement also enabled the Treasury to ensure its proposed policy was reflective of common practice in the sector and responsive to the requests for reform. 

Some proposals that were originally considered have been subject to much debate between internal and external stakeholders.  This draft Bill includes those proposals on which a degree of consensus has been reached.

Future trust reform

Other proposals regarding trusts law reform remain under consideration and Treasury is open to considering further changes to trusts law in future.  In particular, a new proposal relating to Ethical, Social and (Corporate) Governance (“ESG”) matters is currently being developed and considered. 

The aim of this proposal would be to enable trustees to have regard to the wishes and views of beneficiaries in respect of ethical, environmental and social investing. If you have any comments on this proposal or have any other suggestions regarding other areas of Trusts law that you feel should be considered for reform, these would be welcomed.

Why your views matter

The Treasury welcomes comments from all members of the public.

In particular, the operation of this new legislation will affect a number of specific stakeholders including:

  • trust and corporate services professionals
  • individuals with an interest in a Manx trust

What happens next

The Treasury will publish a summary of the responses as soon as possible after the closing date of the consultation. Based on the consultation feedback, changes to the draft Bill will be considered and applied where appropriate.

Areas

  • All Areas

Audiences

  • All residents

Interests

  • Policies, strategies & plans