Since receiving Royal Assent on 18 July 2023, now more than one year on, the Trusts and Trustees Act 2023 (“the 2023 Act”) has introduced significant updates to the Isle of Man’s trust law, aiming to enhance the legal framework for trusts and trustees. Sections 1 and 2 took immediate effect, while the remaining provisions were implemented on 4 December 2023. These amendments mark an important evolution in the Island’s trust legislation, informed by a 2022 consultation that included extensive input from private sector stakeholders.

Key Amendments and Updates

1 | The Trustee Act 1961 – one year on…

The 2023 Act amends the Trustee Act 1961, the principal legislation outlining the duties and powers of trustees, the appointment and removal of trustees, and the court’s authority over trustee actions. The new Act introduces express powers for the court to declare a trustee’s exercise of power as voidable or void if it was influenced by irrelevant considerations or failed to consider relevant factors, regardless of whether the trustee or their advisor made an error.

2 | The Apportionment Act 1982 – one year on…

The 2023 Act updates the Apportionment Act 1982, which governs the allocation of periodical income based on time. It clarifies the default legal position regarding entitlement to income generated from trust property created after the commencement of the new law, providing greater certainty for trustees and beneficiaries.

3 | The Limitation Act 1984 – one year on…

The Act also revises the Limitation Act 1984, which sets out time limits for various legal actions in the Isle of Man. The amendments specify when the limitation period begins for a breach of trust and outline circumstances where no time limit applies against a trustee, offering clearer guidelines for legal recourse.

4 | Revisions to the Trustee Act 2001 – one year on…

The 2023 Act introduces several changes to the Trustee Act 2001, which governs the duties, powers, and liabilities of trustees. Notably, it:

• Revises the trustee’s duty of care in contractual matters and dealings with third parties.
• Codifies the duty to disclose trust information, while also defining situations where disclosure may be withheld.
• Grants trustees the express power to contract with themselves in the capacity of trustees of separate trusts.
• Limits the liability and claims of third parties dealing with a trustee to the value of the trust property, provided they are aware of the trustee’s capacity.

One year on, the legal industry is still waiting to see the first judgment that discusses the implementation of these changes. While it is too early to assess the impact of these changes in court, the new legislation aims to provide clearer guidance on the rights and obligations of trustees and beneficiaries, enhancing the role of the Isle of Man Courts in trust law matters.

Legal Advice and Support

This overview, “One year on”, is intended for general informational purposes and does not constitute legal advice. For specific guidance or legal support regarding Isle of Man trust law, please do not hesitate to contact Chris Webb or Candy Chan.

Article “One Year On: The Impact of the Isle of Man Trusts and Trustees Act 2023” posted on 13 November 2024
Written by Chris Webb