WillsThird Edition of the STEP Provisions Released: What has changed?

On 1st November 2023, the Society of Trust and Estate Practitioners (STEP) published the Third Edition of their Standard and Special Provisions. WillPack previously incorporated the Second Edition into all of our wills and have immediately begun to incorporate the Third Edition.

The Third Edition has kept close to the structure of the Second Edition but has made a number of key changes. This article will cover the changes that been made.

What are the STEP Provisions?

A suitably drafted will should contain specific powers for executors and trustees. In older Wills, it was common to see all the administrative powers included within the Will itself; which made an already somewhat complex will even more complicated and difficult for a lay person to understand.

The STEP Provisions are simply a set of powers available to executor and trustees. Rather than these being included in the will itself, the will simply includes a clause incorporating these provisions. This will ensure that executors and trustees will have sufficient powers, without the will being overcomplicated on the face of it.

What has changed?

The Third Edition has made key changes to the following Provisions of the Second Edition.

1. Provision 4.16 Receipt by Charities, etc
2. Provision 5 – Powers of Maintenance and Advancement
3. Provisions 10 and 11 – Trustee Remuneration and Trust Corporations
4. Provisions 6 and 18 – Minors and beneficiaries without capacity
5. Provision 16 – Companies
6. Provision 17 – Powers of Maintenance: Deferring income entitlement
7. Provision 21 – Appointment and retirement of Trustees
8. Provision 22 – Power to appropriate at the value at time of death

Other minor changes have been made that are not noteworthy such as the inclusion of new definitions in provision 2.

Provision 4.16 Receipt by Charities, etc

This provision has been widened to ensure that new entities such as Charitable Incorporated Organisations are included.

Provision 5 – Powers of Maintenance and Advancement

This provision of the Second Edition has been removed. This provision made amendments to S31 and S32 Trustee Act 1925, however the Inheritance and Trustee Powers Act 2014 amended the Trustee Act 1925 on this basis. As statute now provides for this, Provision 5 was no longer required.

Provisions 6 and 18 – Minors and beneficiaries without capacity

The Second Edition included two provisions relating to minors and beneficiaries without capacity. Provision 6, a standard provision, related to powers over income and provision 18, a special provision, related to powers over capital.

The powers over capital’s position as a special provision was no longer considered justified. Provision 18 has been removed as a special provision and the two provisions have been combined into a single standard provision at provision 5 of the Third Edition.

Provisions 10 and 11 – Trustee Remuneration and Trust Corporations

Provisions 10 and 11 of the Second Edition on Trustee Remuneration and Trust Corporations have been amended. The amendments are to ensure that professional trustees and trust corporations can charge and act as trustee in accordance with their standard terms and conditions from time to time and not just those in force when they are appointed.

These are reflected in Provisions 9 and 10 of the Third Edition.

Provision 16 – Companies

In the Second Edition, Provision 16 included terms on trustee supervision of a company in which the trustees are interested. The new Provision 15 of the Third Edition adds further provisions relating to companies. Firstly there is a power for the trustees to incorporate and promote companies. Secondly there are provisions for the trustees to enter into a range of arrangements relating to companies in which the trust is invested. This could include takeovers and winding up of companies.

Provision 17 – Powers of Maintenance: Deferring income entitlement

Where S31 Trustee Act 1925 applies to a trust, a beneficiary becomes entitled to trust income at the age of 18 and Trustees can only accumulate or apply the income while the beneficiary is under 18. Provision 17 of the Second Edition varied this so that a beneficiary would instead become entitled to income at age 21.

The new Provision 16 of the Third Edition now varies S31 so that a beneficiary only becomes entitled to trust income at the age of 25.

Provision 20 – Appointment and retirement of Trustees

New provisions have been included in the new Provision 18 of the Third Edition to assist with the removal of a trustee who lacks mental capacity, or to change trustees where a person with the power to appoint new trustees lack capacity.

Provision 22 – Power to appropriate at the value at time of death

This provision of the Second Edition has been removed, as the valuation should be made at the time of the appropriation as a matter of general law. STEP now state that if this is required it would be better added as a bespoke power after an appropriate explanation provided to the client.

Conclusion

We hope that this explains the changes made between the Second and Third Edition of the STEP Provisions. For further detail, a copy of the Third Edition in full, along with a toolkit for practitioners, FAQs and a client guide are available from STEP here.

 

 

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