Disclosure of trust information to beneficiaries

Purpose of the new rules

The purpose of the new rules is to ensure that beneficiaries have sufficient information to enable the terms of the trust and the trustees’ duties to be enforced against the trustees. There are two elements to the new obligations:

• disclosure of basic trust information to all beneficiaries, and
• responding to a request from a beneficiary for further trust information.

Disclosure of basic trust information

Under the Act there is a presumption that the trustees will make available to every beneficiary the following “basic trust information”:

• the fact that the person is a beneficiary
• the name and contact details of the trustee
• the occurrence of, and details of, each appointment, removal and retirement of trustee, as it occurs, and
• the right of the beneficiary to request a copy of the terms of the trust or trust information.

The obligation to make this information available is an ongoing one. The trustees are required to consider at reasonable intervals whether they should be making the information available. This is one aspect of the duty set out in the Act to consider actively and regularly whether to exercise one or more powers (discussed in our next Brief Counsel on trustee duties).

However, before proceeding the trustees must consider the factors set out in section 53 of the Act and if the trustees reasonably consider, taking those factors into account, that the information should not be made available to every beneficiary, the trustees may decide to withhold some or all of the information from one or more beneficiaries or classes of beneficiaries. The factors are:

• the nature of the beneficiary’s interest in the trust including the likelihood of the beneficiary receiving a benefit
• whether the information is subject to personal or commercial confidentiality
• the expectations and intentions of the settlor at the time the trust was created
• the age and circumstance of the beneficiary and of the other beneficiaries of the trust
• the effect of disclosure on the beneficiary and on the trustees, on other beneficiaries, and on third parties
• the effect of disclosure on family relationships, and relationships between the trustees and some or all of the beneficiaries to the detriment of the beneficiaries as a whole
• in a trust with a large number of beneficiaries or unascertainable beneficiaries, the practicality of giving the information to all beneficiaries or all members of a class of beneficiaries
• the practicality of imposing restrictions or safeguards on the use of the information or subject to redactions, and
• any other factor the trustee reasonably considers is relevant to determining whether the presumption applies.

Trustees must consider these factors in deciding whether or not to provide the information very carefully and in compliance with their trustee duties. There is an expectation under the Act that trust information will be withheld from all beneficiaries only in exceptional circumstances. If a decision is made to withhold information from any beneficiary, we would recommend that legal advice is taken to ensure the decision is sound.

In the case of minor beneficiaries (anyone under the age of 18) or those who lack capacity, the information may be given to a parent, guardian, attorney or property manager on behalf of the beneficiary.

Disclosure of trust information on request

The second obligation relates to requests received from beneficiaries for trust information. Under section 52 there is a presumption that trustees must, within a reasonable period of time, give a beneficiary the trust information the beneficiary has requested.

“Trust information” is any information regarding the terms of the trust, administration of the trust or trust property that it is reasonably necessary for the beneficiary to have to enable the trust to be enforced. Trust information does not include the trustees’ reasons for a decision, which may remain confidential.

Before proceeding, the trustees must consider the section 53 factors set out above and an additional factor, which is the nature and context of the request for the information. If the trustees reasonably consider, taking all those factors into account, that the information should not be given to the beneficiary, the trustees may decide to refuse the request. Again, a decision to give or withhold information may involve complex considerations and should not be made lightly. Trustees should consider whether legal advice would be helpful in the particular circumstances.  

The trustees are able to require beneficiaries requesting trust information to pay the reasonable costs of them giving the information.

Settlor’s wishes

The expectations and intentions of the settlor on establishment of the trust are to be taken into account by the trustees in making decisions both to provide the basic trust information and whether to withhold trust information following a request. Settlors should ensure their expectations and intentions are expressed clearly on these issues. For example, settlors may have strong views on the impact of giving the information to younger beneficiaries or distant beneficiaries who would not be expected to receive any benefit except in exceptional circumstances.

Court directions required where no information is disclosed

If a situation results that no beneficiary has any information because the trustees cannot identify any beneficiary to whom information can be given, or the trustees decide to withhold all basic trust information from all beneficiaries for more than 12 months or a request for information is refused, the trustees must apply to the court for directions as to whether the decision to withhold was reasonable and to determine an alternative means by which the trust may be enforced and the trustee held accountable.

It is likely that these new rules, which require positive action on the part of trustees, will necessitate a change to the way many trusts operate.  

For specialist advice on any matter raised in this Brief Counsel please contact a member of our Private Client team.