STEP Provisions 3rd Edition
After many months waiting for the Probate Registry to approve them, STEP’s latest version of their provisions, to incorporate in Wills and Trusts, is now available: https://www.step.org/public-policy/step-standard-provisions
What’s different from 2nd edition?
The main amendment adds to the interpretations the fact that a ‘Trust Corporation’ has the same meaning as in the Trustee Act 1925 and in clauses 9 and 10 a Trust Corporation appointed as a trustee is appointed on that corporation’s standard terms and conditions as published from time to time and is entitled to reasonable remuneration and the reimbursement of proper expenses.
The old clause 5 in the 2nd edition is no longer required as it altered the wording of ss 31 and 32 Trustee Act 1925, which were changed by the Inheritance and Trustees Powers Act 2014.
The old clause 8 (now clause 7) on apportionment remains as before save that it now refers to the law in s.1 Trusts (Capital and Income) Act 2013.
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Have the Special Provisions changed?
The provisions are now in clauses 13 – 20. Clause 15 replaces the old clause 14 in relation to supervision of companies. The new clause is more extensive and gives the trustees power to incorporate any company in any part of the world. It also gives the trustees the power to compromise or make arrangements with any company in which the trust is invested and enter into any arrangements in relation to the winding up or liquidation of a company in which the trust is invested.
The Specified Age for the purposes of s.31 Trustee Act 1925 used to be 21 in the 2nd Edition. The new clause 16 changes the Specified Age to 25 to bring it in line with Age 18-25 trusts. The clause in the 2nd edition giving the trustees the ability to apply capital for the benefit of a minor or a beneficiary without capacity has now been incorporated within the standard provisions at clause 5.
Clause 18 (formerly clause 20) regarding the appointment and retirement of trustees has been extended to include a paragraph about dealing with an incapable trustee.
The power to appropriate assets at their value at the time of death (formerly clause 22) has been removed entirely. This is because a valuation should be made at the time of the appropriation as a matter of the general law. It was thought by those preparing the 3rd edition that if such a power was required it could be included as a bespoke power after discussion with the client and it should not be hidden in a set of general powers which address more commonly arising situations.
When should the STEP provisions be used?
The explanatory notes to the STEP provisions make it clear that they are only suitable for use in Wills and Trust made in accordance with the law of England and Wales. They are not designed for use in documents governed by the law of different jurisdictions. Any such use may well result in litigation because of differences in interpretation, meaning or conflict with the laws of that jurisdiction.
It remains the case that where there is any inconsistency between the wording of the STEP provisions and other clauses in the Will or settlement containing them, the terms of the Will or settlement take priority. Many practitioners use their favourite clauses in Wills and then for good measure incorporate the STEP provisions with the result that without this treatment you would have two different ways of dealing with a particular issue. Nevertheless, the alternative wording of the Will may take precedence, but does it sit well with the other STEP provisions? It is better to have one set of workable terms rather than a mixture which may not operate well together.
Alongside the STEP Provisions 3rd Edition is a Toolkit for Will writers. This is an excellent tool and must be read by everyone using the STEP Provisions. It provides guidance on the use of the STEP Provisions and an explanation of the main clauses to help you in guiding your clients when you use the provisions.
This is a guide for clients to read alongside or instead of the STEP provisions. You could supply a link to it or a hard copy to a client where you have incorporated the STEP provisions in a Will or settlement and the client just wants an explanation and not a copy of the full provisions.
Frequently Asked Questions (FAQs)
There is a set of FAQs for both the lay person and the practitioner.
All in all, it is good to have an updated version of the STEP provisions. Now all you need is time to read them and consider their appropriateness in each client’s case.
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