Isle of Man trust law amendments now in force

Sections 1 and 2 of the new regime were brought into force when it received royal assent on 18 July 2023. The remaining sections are now also in effect.

The Act amends the Trustee Act 2001, with a new Part 1A codifying the position set out in the Isle of Man case of Schmidt v Rosewood. It provides clarity as to who may apply for trust information and when a trustee may refuse to provide trustee information. It also inserts a new Part 3A, allowing trustees to contract with themselves when acting as trustees of multiple trusts. In this respect it brings the law into line with the realities of the modern trust industry. A third provision in Part 4A limits the trustee's liability to the value of the trust property when transacting as a trustee with a third party.

The Act also inserts a new section 55A into the Trustee Act 1961, restoring the Hastings-Bass rule on voiding trustees' transactions. Clarity on this matter has been lacking since 2013, when the UK Supreme Court decided in Pitt v Holt that trustee mistakes could not be reversed where there was no breach of duty. The new s.55A now clarifies that the Isle of Man courts can reverse a decision whether or not the failure to consider relevant factors resulted from a lack of care or other fault on the part of the trustee or an advisor to the trustee. No breach of duty is necessary.

Law firm Appleby says the Act ensures the Isle of Man creates certainty across the industry.

Sources

• Appleby
• Isle of Man treasury (June 2022 statement, PDF)