Full consideration of the latest proposals for the reform of trustees' powers and duties was given in Techlink bulletins on 4th October and 3rd November 1999. Those who followed the Queen's speech on 17th November 1999 will already be aware that the Trustee Bill is included in the main programme for the current Parliamentary session. The Bill arises from the Report published jointly by the Law Commission and the Scottish Law Commission which was discussed in the previous two bulletins and is based on the draft included in the Law Commission Report. The inclusion of the Trustee Bill in the main Parliamentary programme indicates that we should be confident that the Bill will be enacted in the current Parliamentary session.
As previously indicated, the most important provisions in the Bill that are relevant to financial services industry are those concerning the trustees' duty of care and in particular the requirement that the trustees must seek investment advice in certain circumstances. The Trustee Bill should provide financial advisers with a good opportunity to discuss trustee investments with their professional connections. Inevitably this means that advisers needs to review their knowledge of trusts, trust taxation and principles applying to trustee investments.
Advisers should, of course, bear in mind that most modern trusts would not be affected by the Trustee Investment Act, having in the body of the trust, widely drawn investment powers. Despite this however this change, together with the changes to dividend taxation (in many cases detrimentally affecting the amount that beneficiaries under discretionary trusts receive as income) and the changes to the taxation of capital gains and life assurance held in trust all represent excellent reasons to review the investment strategy of trusts.