STEP Standard Provisions 3rd Edition

STEP Standard Provisions 3rd Edition

Introduction The STEP Standard Provisions is a publication for practitioners who draft wills subject to the law of England and Wales. It sets out clear provisions to include in a Will avoiding technical terms that may confuse the lay reader. The 1st edition of the STEP standard provisions was issued in 1992. The 2nd edition of the standard provisions was issued in 2011. The Provisions are an extremely valuable resource for practitioners which have helped simplify this area. However it is clear that with trust and will legislation changing considerably since the publication of the second edition that the Provisions needed to be update and modernised to reflect these changes. 2

Main Changes The most significant amendment is the standardisation of the clauses on Trust Corporations which have incorporated wording from the terms and conditions of Trust Corporations. The following clauses have been deleted: Clause 5 (Powers of maintenance and advancement) of the 2nd edition as the statute had caught up and thus this was no longer required. Clause 18 (Minors and beneficiaries without capacity: powers over trust capital) of the 2nd edition was removed as it was felt this was covered by Clause 5 (Minors and beneficiaries without capacity: powers over income and capital) of the 3rd edition. Clause 22 (Power to appropriate at value at time of death ) of the 2nd edition as the appropriation should be done at the time of the appropriation as a matter of general law.

STEP Standard Provisions (non-special) clauses 1-12 The split of standard and special provisions has been retained due to the provision in the 2nd edition allowing trustees to adopt the new 3rd edition in place of the 2nd edition but they cannot add special provisions if they only have the standard provisions of the second edition. Clause 1 now takes into account the ruling of OH v Craven [2016] EWHC 3146 (QB). Clause 2.1.7 has been added to include definitions both of Lay Trustees and Trust Corporations Clause 3 now takes account of the following case (Poppleston) which covers interest in possession (disabled person) trusts; Court of Appeal: Barclays Bank Trust Company Ltd v Revenue and Customs [2011] EWCA Civ 810 (14 July 2011) (bailii.org) 4

STEP Standard Provisions (non-special) clauses 1-12 (ii) Clause 4 no further additional powers have been added, however existing additional powers such as 4.7 and 4.8 have been extended. Clause 5 focuses on minors and beneficiaries without capacity and powers over income and capital Clause 6 gives the ability to disclaim only part of a gift which adds flexibility Clause 7 has been amended to specify that the Section 1 Trusts (Capital and Income) Act 2013, which has been introduced since the 2nd Edition, shall apply and no other common law, statutory or other rule of apportionment shall apply such that all Income and expenditure shall be treated as arising when payable. Clause 8.3.3 has been added which clarifies that the clause does not apply where the Fiduciary is not the settlor acting in connection with reserved powers as settlor. 5 STEP PowerPoint Template

STEP Standard Provisions (non-special) clauses 1-12 (iii) Clause 9 has been significantly redrafted to include mention of Trust Corporations. Clause 10 has been streamlined and has been reworded after a review of a number of Trust Corporation terms and conditions. Clause 11 covers liability of trustees Clause 12 whilst it is not proposed to bring out new editions of the STEP provisions often, it has been left that at some time a fourth edition may be needed 6 STEP PowerPoint Template

STEP Special Provisions clauses 13 - 21 Clause 13 covers borrowing with no major changes Clause 14 covers trustee delegation with no major changes Clause 15 covers on the supervision of companies and has been expanded to look at powers to promote companies and powers in relation to companies Clause 16 the age has been raised to 25 for the specified age of when individuals can become eligible for trust income 7 STEP PowerPoint Template

STEP Special Provisions clauses 13 – 21 (ii) Clause 18 covers the use of absolute discretion for trustees with no major changes Clause 19 covers the appointment and retirement of trustees. Clause 19.3 has been added to specify for the purposes of s.36. Trustee Act 1925,what situations would result in someone being deemed incapable of acting as a trustee, or of exercising the power referred to in s.36(1)(b). Clause 20 covers the use of powers relating to income and capital with no major changes 8 Clause 21 covers the relationships unknown to trustees with no major changes STEP PowerPoint Template

Notes The STEP Provisions do not include a survivorship clause. There may be reasons to include such a clause, such as the possibility of the testator and any of their beneficiaries dying over a relatively short time, and if it is to be included it must be expressed in the will. These notes are intended to assist practitioners, settlors and testators in the use of the STEP Standard Provisions. They are not, and cannot be, a substitute. 9 STEP PowerPoint Template

Questions 10