Section 1(1) of the Settled Land Act 1925 provided that if under a deed, a will or certain other instruments land was limited in trust for beneficiaries or charged with certain payments, the instrument or instrument created or was for the purposes of that Act a settlement. Sub-section (2) provided that if an infant became beneficially entitled to the fee simple of or a term of years in land and there was no such instrument, there should be deemed to be a settlement. (A case where a settlement was deemed to have been made under this sub-section is Re Taylor [1932] 1 Ch 242. See now Schedule 1, paragraph 2 to this Act.)

A trust made after the commencement of the new Act cannot be a Settled Land Act Settlement and so will be a trust of land--Section 2(1). An existing SLA settlement will, however, remain as such and it is also provided that sub-section (1) does not apply to a new settlement which is created when--

• an interest under an existing settlement is altered; or
• a person becomes entitled under an existing settlement

Such a new settlement might, for example, be created as the result of the exercise of a power of appointment by the tenant for life, or on the occasion of a resettlement by the beneficiaries, or the approval by the Court of an arrangement varying the trusts under the Variation of Trust Act 1958. The question whether an appointment or advance under a power contained in a settlement creates a new settlement has been considered by the Courts in connection with the definition of the expression "absolutely entitled against the trustee" in Section 71 of the Taxation of Chargeable Gains Act 1992 -- see Roome v Edwards [1981] STC 96 and Bond v Pickford [1983] STC 517 and the Inland Revenue Statement of Practice SP/84.

It would be usual for such an appointment or resettlement under a SLA settlement to leave the existing settlement in existence since the 1925 Act contemplated this happening by providing that if land is resettled and any estate or interest is expressed to be limited to any person in restoration or confirmation of his estate under a prior settlement he shall be treated for the purposes of the Settled Land Act 1925 "and otherwise" as of his former estate of interest -- Section 22 of the Settled Land Act 1925.

If all the property held on the trusts of a SLA settlement consists of settled land, investments and capital moneys, and all the settled land is then sold, then at that time the settlement will cease to be a SLA settlement and will become a trust of land. If, however, settled chattels, or "heirlooms", within Section 67 of the Settled Land Act 1925 are held on the trusts of the settlement at that time then it will remain a SLA settlement until they too are sold.

If a settlement ceases to be a SLA settlement as a result of all the settled land and heirlooms being sold the settlement will not automatically become a trust of land unless the trustees invest the proceeds of sale in land. Many of the provisions of the new Act will however apply since it will be a trust of the proceeds of land -- see Section 17(3)(a).

Section 29 of the Settled Land Act 1925 provided that for the purposes of that section all land held on charitable, ecclesiastical or public trusts should be deemed to be settled land and that the trustees of it should have the powers of a tenant for life and of the trustees of a settlement ^[1]. Sub-section (5) provides that trusts of any such land (whether the trusts are created before or after the commencement of the Act) shall be trusts of land rather than settled land; section 29 itself is repealed. There are, however certain restrictions on the powers exercisable by charity trustees -- see Sections 8(3) (provisions relating to consents), 10(2) (number of consents required), and 16(6) (purchaser protection) and Schedule 1, paragraph 4 (conveyance of charity land).

The wording of sub-section (6) is slightly puzzling. It refers to the imposition of a "trust" when there would not otherwise be a "trust". It would seem that the draftsman may have intended to refer to a "trust of land" rather than to any trust.