A new law dealing with some technical aspects of trusts – The Trusts (Capital and Income) Bill – has now completed all its parliamentary stages and is awaiting Royal Assent. It will apply only in England and Wales.
The Bill was drawn up following a consultation carried out and report prepared by the Law Commission.
The Bill deals with technical matters relating to trust law where trustees have to distinguish between capital and income in their management of the trust property. It would make changes to the current law in three areas and would deal with:
- technical rules requiring apportionment between capital and income
- the classification of shares received by trustees on a tax-exempt corporate demerger (whether direct or indirect)
- investment by charity trustees on a ‘total return’ basis.
The proposed reforms contained within the Bill are designed to:
- simplify and modernise trust law rules that create unnecessary expense, litigation and difficulty to trustees of both private and charitable trusts
- decrease the regulatory burden on the Charity Commission and
- facilitate total return investment by charities.