STEP has received much correspondence about the second edition of the Standard Provisions. These FAQ have been developed with the help of Toby Harris TEP and James Kessler QC TEP.
A. First edition or second edition?
A1 Does SSP2 repeal or supersede the first edition?
No. The first edition remains in effect if it is incorporated into a will or settlement, whenever made.
A2 Where an individual has already executed their will, can the executors opt to use SSP1 or SSP2?
A will should incorporate by reference only a document that was in existence at the date of execution. SSP2 was formally adopted by the Society on 16 April 2011. It is therefore possible for a will made now to incorporate SSP2. Which provisions are incorporated depends entirely on the terms of the document. See in particular SSP2 Provision 1 for the rules for incorporation of SSP2.
A3 Can I simply carry on using the first edition?
Yes, though we would recommend switching to the second edition.
A4 Can clients be asked when they update their wills whether they want to include the second edition?
Yes.
A5 With existing trusts, is variation possible (to replace reference with first to second provisions)?
The variation would in principle be possible, with the consent of all the beneficiaries and/or the consent of the Court, but it will generally be easier to leave the first edition to continue in effect.
B. Incorporating SSP2
B1 Can I choose to include the “core” provisions of SSP2 only?
Yes: see provision 1.1.
B2 If I do choose to include only the “core” provisions am I ignoring the Special Conditions?
It is hoped that you are not “ignoring” the Special Conditions; rather that you are making a decision not to include the Special Conditions, which do not suit the circumstances or wishes of every client.
B3 If I include just the core provisions and ignore the Special Provisions can the trustees have access to the Special Provisions at a later date?
No. The decision should be made at the time of preparing the document.
B4 Can I include SSP2 including the Special Provisions, providing I make reference to their inclusion in the will?
Yes: see provision 1.3.
B5 We can use the forms in clause 1 to incorporate the Second Editions into our wills. However, if we refer to the Provisions in our wills / trusts before the Practice Direction (mentioned in the introduction) is published, we may need to provide a full edition of the Provisions as well as the will to obtain a Grant of Probate. What is the Society doing about this?
Arrangements have been made to obtain an appropriate Practice Direction and members will be notified when that is obtained.
B6 Our definition of the STEP Provisions was recently amended in our wills and trusts to include “any subsequent updates or amendments to the Provisions.” (This was done in anticipation of the new second edition, so it could be used when published).
The Provisions cover such amendments at para 13 and I note that trustees require a deed to change from the second to any future third or subsequent edition. We also do not have that clause in our wills or trusts. I was concerned whether our amendments were sufficient automatically to include the second edition into our current documents (e.g. those executed before the Provisions were published, but with provision to include any subsequent updates or amendments to the first edition). Should we be worried about this?
It is best to incorporate the second edition, using the wording set out in SSP2 clause 2; and in the event of a future third edition, to adopt the procedure set out in SSP2 Provision 13.
C. Miscellaneous
C1 Suppose the trust has a disabled beneficiary at the time it takes effect: will a trust incorporating the Standard Provisions meet the requirements of s89 Inheritance Tax Act 1984 (disabled trusts)?
This topic is discussed in Drafting Trust and Will Trusts A Modern Approach 10thedition chapter 27. The issue has been highlighted in the decision of the Court of Appeal in Re Poppleston, Barclays Bank Trust Company v HMRC [2011] EWCA Civ 810, where the Court interpreted a will for the benefit of a disabled son loosely and purposively, so as to meet the requirements of s.89; the Court relied in part on a clause similar to Provision 3 of SSP2.
Wherever there is a beneficiary who is disabled (within the meaning of the IHTA) the drafter should consider specifically whether it is desired to draft the will so as to meet the conditions of s.89 IHTA or not to do so, and draft the will accordingly.
C2 Provision 4.4 talks about “depreciation of the capital value” of property. Does that mean that if a shareholding goes down the trustees can make good the loss out of income?
The clause is not intended to cover fluctuations in the value of marketable securities. As is implied by the second sentence of 4.4, the situation that is here addressed includes making good the gradual and inevitable loss in value of wasting assets such as leases.
C3 A trustee can be paid under clause 10, but what if he does not do the work personally but gets his firm to do it? Can the firm charge?
Yes, see the Guidance paragraph 10. It is considered that s29 Trustee Act 2000 is wide enough to allow charging by a partnership or an LLP.
C4 Do you plan to update the wording in the Standard Provisions in relation to s31 and s32 Trustee Act in light of the changes in the Inheritance and Trustees Powers Act, which came into force on 1 October 2014?
Our general approach is that new editions of the Provisions should be infrequent and published only if the new edition offers a material improvement over the old one. The reason for this is that there are still many wills and trusts in existence which incorporate the first or the second editions of the Provisions. Practitioners administrating these wills have to keep some familiarity with the old editions and if there is a third edition, this task would be more difficult.
In this particular case we do not feel that the changes made by the Inheritance and Trustees Powers Act require a new edition, as the Standard Provisions currently provide:
5. Sections 31 and 32 Trustee Act 1925 shall apply with the following modifications.
- 5.1 The proviso to section 31(1) shall be deleted.
- 5.2 The words “one half of” in section 32(1)(a) shall be deleted.
While that provision is now unnecessary because the ITPA makes the same changes, it does not do any harm and it should not cause confusion. When there is a material need for a new edition, we will take this opportunity to delete this clause.
Disclaimer
This FAQ contains only general comments. The drafting of any particular document is the responsibility of the drafter. While every care has been taken in the preparation of this FAQ, STEP and those involved in the preparation of this guidance do not accept any responsibility for any loss occasioned by reliance on this guidance.
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