Isle of Man Trustee Act 2001 overview

The Trustee Act 2001 is an Isle of Man statute with provisions on trustees and persons with trustee investment powers.

The Trustee Act 2001

The Isle of Man Trustee Act 2001 is Chapter 18. It amends the law relating to trustees and people with trustee investment powers, and covers connected purposes.^[1]

The Act concerns Isle of Man law.

How the Act is organized

The Act is arranged in six Parts, followed by four Schedules. The early Parts group its central rules by subject. The final Part gathers miscellaneous and supplementary matters, including rules on interpretation. It also addresses amendments and commencement.^[1]

Parts and their main subjects
Part	Subject
1	Duty of care and when it applies^[1]
2	Investment powers, criteria and advice^[1]
3	Acquisition of land^[1]
4	Agents, nominees and custodians^[1]
5	Payment rights, trustee remuneration and charitable trustees^[1]
6	Miscellaneous and supplementary provisions^[1]

Part 4 covers agents, nominees or custodians, along with review and related matters and supplementary provisions. Part 5 addresses payment rights under trust instruments and remuneration for certain trustees. It also covers charitable trustees. Other provisions concern expenses and payments for agents, nominees or custodians. The Act then lists schedules on duty of care, consequential amendments, transitional provisions and repealed enactments.^[1]

Defined terms and cross-references

Section 39 supplies definitions and points readers to provisions that explain other expressions. It defines terms including asset, charitable trust, custodian trustee, settled land, trust corporation and trust funds. For example, trust funds means the income or capital funds of a trust.^[1]

Other expressions are defined or explained elsewhere, with section references listed in section 39. Those include the duty of care, the general power of investment, the standard investment criteria, a lay trustee and a trustee acting in a professional capacity. This cross-reference list helps locate a term's operative rule without treating the definition section as the full rule.^[1]

Duties, investment and land

Part 1 establishes a duty of care where that duty applies. The trustee is to exercise care and skill reasonable in the circumstances, with regard to special knowledge or experience and, for professional work, what is reasonable to expect in that business or profession. Schedule 1 specifies situations where the duty applies, including investment and land acquisition. It also covers arrangements for agents, nominees or custodians. The duty does not apply to the extent the trust instrument indicates that it is not meant to apply.^[1]

Part 2 gives trustees a general power to make kinds of investment available to an absolute owner, subject to the Part's provisions. It excludes direct investment in land from that general power, while section 8 separately addresses land. When exercising an investment power, trustees must have regard to suitability and diversification in light of the trust's circumstances. They must review investments from time to time. Trustees must also obtain and consider proper advice, unless they reasonably conclude that advice is unnecessary or inappropriate.^[1]

Delegation and service arrangements

For asset management functions, the Act requires a written agreement or evidence in writing, as well as a written policy statement giving guidance. Trustees must review the arrangements and how they operate while the agent, nominee or custodian acts. If asset management is delegated, the review includes whether to revise the policy statement and whether it is being followed.^[1]

The Act defines a custodian by reference to safe custody of assets or related documents and records. Appointments of nominees or custodians under the specified sections must be in writing or evidenced in writing. Part 5 separately sets rules on remuneration and reimbursement, including reasonable remuneration in specified circumstances and reimbursement of properly incurred expenses.^[1]

Other provisions and where to find the Act's text

Part 6 addresses insurance, personal representatives, pension schemes, authorised unit trusts, and extension of the perpetuity period. It also covers interpretation. Further provisions address amendments and commencement. The Act applies with modifications to personal representatives administering an estate. It sets out distinct rules for pension schemes and authorised unit trusts. The schedules supply application details and transitional provisions, and list amendments or repeals.^[1]

Questions and answers

Which Isle of Man statute does this page cover?

It covers the Trustee Act 2001, identified as Chapter 18. The Act concerns trustees and persons with trustee investment powers.^[1]

How many Parts and Schedules does the Act list?

The Act has six Parts and four Schedules. The Parts group provisions by subject, with interpretation and supplementary matters in Part 6.^[1]

Where does the Act explain its defined terms?

Section 39 defines several terms and identifies sections that define or explain others. Examples include trust funds, the duty of care and standard investment criteria.^[1]

What investment rules does the Act describe?

Part 2 provides a general investment power and requires regard to suitability and diversification. It also provides for review and proper advice, with an exception where the trustee reasonably concludes advice is unnecessary or inappropriate.^[1]

Is there an official consolidated text website?

Yes. Tynwald, the Isle of Man parliament, publishes the Act text and its arrangement of sections.^[1]

Related glossary terms

Withholding tax: Withholding tax applies to chapter 3 income payments. Such payments may be exempt under a treaty or taxed at a reduced rate.
Settlor: A settlor is associated with creating a trust or placing property into it.
Reserved powers: Reserved powers are rights a settlor keeps, or gives to another person, under a trust. Trust laws address their validity and timing, and administration.