Innovation and Reform in the Law of Trusts Editors’ Introduction

This special issue of the King’s Law Journal contains eight articles each exploring the theme of ‘innovation and reform in the law of trusts’.

Trusts are an important legal institution with numerous roles: facilitating commercial transactions, charitable activity, wealth management, tax planning, succession arrangements, investor protection, amongst other uses. The latest statistics show for the United Kingdom that 633,000 trusts and estates were registered with the Trust Registration Service as of 31 March 2023.¹ In the 2021–2022 tax year, trusts and estates received total income and chargeable gains of £3.075 billion.² The use of trusts by the wealthy can be controversial,³ with a (sometimes unfair) underlying suspicion that they are a means for illegitimate asset protection, whether from the revenue, estranged family members, prospective creditors or the public.

Trusts reform has been on the agenda in a number of jurisdictions. New Zealand enacted its Trusts Act 2019 after a decade of work by its Law Commission.⁴ At the time of writing, the Trusts and Succession (Scotland) Bill had been passed by the Scottish Parliament,⁵ based on work by the Scottish Law Commission.⁶ The Law Reform Committee of the Singapore Academy of Law made proposals in respect of non-charitable purpose trusts in 2021.⁷ In England and Wales, the Law Commission proposed a project entitled ‘Modernising Trust Law for a Global Britain’ as part of its Thirteenth Programme of Law Reform,⁸ ‘to enhance the competitiveness of this jurisdiction’s trust services in a global market’,⁹ given reforms in other jurisdictions. A previous special issue of this journal interrogated key questions around the idea of ‘Global Britain’.¹⁰

Nor are innovation and reform solely the province of the legislature. As several articles in this issue show, appellate courts are regularly confronting difficult questions around the nature and limits of the rights, obligations and consequences of the trust institution, often responding in creative ways. In addition, the executive can innovate, through the roles of the Revenue in the collection of taxes, of government departments in the administration of social security and welfare, and of regulatory agencies such as charity commissions or financial authorities in monitoring and enforcement. When assessing any reform, it is important to consider not just what the change should be, but which institution is best placed to effect it.

It is thus an apposite time to examine innovation and reform in this area. The papers address the theme in different ways and at different levels of granularity – some identify problems and make specific recommendations for reform; others consider how change occurs in the field of trusts, with recent examples of judicial innovations or legislative interventions; several adopt a comparative approach, reflecting upon the differences between jurisdictions and the prospects for the adaptation of reforms from one jurisdiction to another.

The selected papers in this special issue explore the theme across the connected fields of trusts, wealth management and philanthropy.

James Lee and Man Yip, in ‘Statutory Trusts and Trusty Statutes’, analyse recent jurisprudence on various examples of statutory trusts in a number of different contexts to draw lessons for potential future trusts law reform.

In ‘A Comparative Look at “Looking Through” Trusts in Relationship Property Re-Distribution Regimes’ Adam Hofri-Winogradow and Mark Bennett consider the different ways in which several common law jurisdictions approach the question of when an interest under a trust can form part of a spouse’s assets for the purposes of distribution at the end of a relationship.

Ian Murray and John Picton, in ‘The Reform of Charitable Constitutional Purposes: Should Australia Follow England’s Path in Aligning Charitable Trusts and Corporations?’ consider reform in England & Wales and Australia, in the light of the enactment in England & Wales of the Charities Act 2022 (following recommendations of the Law Commission).¹¹

A further catalyst for reform has been greater societal and political awareness of the deployment of wealth. Vincent Ooi and Alvin See examine existing and innovative structural options for trustees’ powers and duties with respect to environmental, social, and governance initiatives in ‘Promoting ESG Investing by Trustees: Risk Management and Structuring Solutions’.

Mukami Wangai’s article, ‘Democracy and family wealth regulation in Kenya: a responsive regulation approach to an inheritance tax’, assesses the potential for a responsive regulation approach to underpin the prospective introduction of an inheritance tax as part of democratic transition in Kenya.

John Mee illuminates the nature of the presumption of advancement in ‘Intra-Family Wealth Transfers: The Presumption or the ‘Presumption’ of Advancement?’. His article makes a novel contribution to a long-standing debate that has been revitalised in the light of dicta from the 2022 High Court of Australia decision in Bosanac v Commissioner of Taxation.¹²

In her article, ‘Priority between competing trustee liens: the limits of judicial innovation and the opportunity for law reform’, Allison Silink critiques the present position on trustee’s liabilities, liens and priority rules, as recently examined by the Privy Council,¹³ and makes a case for reform.

Finally, Hang Wu and Man Yip carefully scrutinise case law on trustee discretions to argue against an influential narrative in trusts law scholarship that is suspicious of so-called ‘massively discretionary trusts’,¹⁴ in their article, ‘Not Such Massively Discretionary Trusts: Proper Purposes Doctrine and Protectors as Means of Control’.

The collected articles in this issue thus interrogate various aspects of the theme of ‘Innovation and Reform in the Law of Trusts’ and deploy different methodologies, with contributing authors from five continents.

These articles are a selection from the papers delivered at the Fifth Trusts, Wealth Management and Philanthropy Conference, held in Singapore in July 2023 and jointly organised by The Dickson Poon School of Law, King’s College London; the Yong Pung How School of Law, Singapore Management University; and the University of York. We thank all those who contributed to the conference: the academics who presented their research, the expert panel chairs, the practitioner delegates who shared their insights and the professional organisation team, led by Adeline Teo. We warmly acknowledge support for the original conference from Butterfield Group, the Centre for Commercial Law in Asia, the V3 Group, and The Dickson Poon School of Law. All articles in this special issue were anonymously refereed: we sincerely thank the referees who offered valuable comments that improved each of the articles.

Finally, we are grateful to Professor Keith Ewing for his encouragement in developing this special issue. We hope that the various ideas and proposals in this issue inspire and inform the debate around the future of trust reform.

Notes

1 His Majesty’s Revenue & Customs, Statistics on trusts in the UK, 12 October 2023 https://www.gov.uk/government/statistics/trust-statistics/statistics-on-trusts-in-the-uk-october-2022 [sic - the link to the 2023 data retains the 2022 date]. The trust registration scheme extends across England & Wales, Northern Ireland and Scotland. There was an increase of 462,000 new registrations between 1 April 2002 and 31 March 2023. For analysis of the registration scheme, see L Brown, ‘Registering express trusts: a necessary clarification or step too far?’ (2022) 28 Trusts & Trustees 664 and E Virgo, ‘Trust Registers and Transparency: A Step too Far?’ (2019) 33 Trust Law International 95.

2 Statistics on trusts in the UK 2003 (n 1).

3 See, for example, the various stories generated by the work of the International Consortium of Investigative Journalists and media partners in three sets of leaks – known as the Panama Papers, Paradise Papers, and Pandora Papers: Australian Broadcasting Corporation, ‘Pandora, Paradise and Panama Papers: Offshore structures exposed by leaks explained’ https://www.abc.net.au/news/2021-10-05/offshore-companies-trusts-tax-and-secrecy-explained/100514250; J Gould, ‘Too late to close the box?’ (2021) 171 New Law Journal 7. More recently still, the UK Government has announced plans for greater transparency over ‘who owns land trusts’ [sic]: Department for Levelling Up, Housing and Communities, ‘Government to crack down on corruption in the property sector’ https://www.gov.uk/government/news/government-to-crack-down-on-corruption-in-the-property-sector.

4 New Zealand Law Commission, R130 Review of the Law of Trusts: A Trusts Act for New Zealand (2013); G McLay, ‘How to read New Zealand’s new Trusts Act 2019’ (2020) 13 Journal of Equity 325; J Palmer, ‘The Trusts Law Legislation Project in New Zealand’ in YK Liew and Y-C Wu (eds), Asia-Pacific Trusts Law: volume 2 – Adaptation in Context (Hart, 2022); and L Clover Alcolea, ‘“Reform, Reform: Aren’t things bad enough already?”: The case of the Trusts Act 2019’ (2023) 17 Journal of Equity 93.

5 The Bill passed stage 3, unanimously on 20 December 2023; for commentary, see D Carr, ‘A new role for the Scottish courts under a reformed trust law’ (2023) 27 Edinburgh Law Review 403.)

6 Scottish Law Commission, Report on Trust Law (SLC No 239, 2014).

7 Report on the Enactment of Non-Charitable Purpose Trusts (Singapore: Singapore Academy of Law, 2021).

8 Law Commission, ‘Announcement of 13^th Programme of Law Reform’ www.lawcom.gov.uk/project/13th-programme-of-law-reform/.

9 Law Commission, Thirteenth Programme of Law Reform (2017), para. 2.24.

10 ‘Global Britain’, edited by Professors Federico Ortino and Keith Ewing (2023) 34(1) King’s Law Journal 1–187.

11 Law Com 375, Technical Issues in Charity Law (2017).

12 [2022] HCA 34.

13 Equity Trust (Jersey) Ltd v Halabi [2022] UKPC 36; [2023] AC 877.

14 See eg Lionel Smith, ‘Massively Discretionary Trusts’ (2017) 70 Current Legal Problems 17 and Hanoch Dagan & Irit Samet, ‘What’s Wrong with Massively Discretionary Trusts’ (2023) 138 Law Quarterly Review 624.