Beneficiary access to information - The new Trusts Bill
By Leone Farquhar - August 2017
As it stands a beneficiary of a Trust does not have a right (as such) to information held by the Trust. Although beneficiaries are entitled to request information from trustees, whether or not that information is provided is a discretionary matter for trustees to decide in exercising their fiduciary duties to beneficiaries.
Essentially what the right answer is to the question of whether or not to disclose Trust information is situation dependent. The Court has come up with a list of factors for trustees to consider when deciding what, if any, information should be disclosed to a beneficiary, but those factors are not common knowledge. Helpfully, they have now made their way into the new Trusts Bill.
If the new Trusts Bill is enacted, the law around disclosure of information to beneficiaries will be made clearer in the sense that the general principles around disclosure and the factors to be taken into account in deciding whether or not to disclose will be set out in the Trusts Act. The position will be as follows:
- A trustee will generally need to make available to a sufficient number of beneficiaries sufficient Trust information to enable the terms of the Trust to be enforced against the trustees;
- A trustee will not be able to withhold all Trust information from all beneficiaries;
- There will be a presumption that a trustee must disclose the following basic Trust information to a qualifying beneficiary, (a beneficiary who is reasonably likely to receive Trust property under the terms of Trust). Although it can be withheld from some, it cannot be withheld from all beneficiaries:
- The fact that a person is a beneficiary of the Trust;
- The name and contact details of the trustee;
- The occurrence of, and details of, each appointment, removal, and retirement of a trustee as it occurs; and
- The right of the beneficiary to request a copy of the terms of the Trust or Trust information.
- A trustee will still be able to refuse to provide information (including the basic Trust information), however, only after considering the general obligation to provide information (as above) and also the following factors:
- The nature of the interests in the Trust held by the requesting beneficiary and the other beneficiaries of the Trust, including the likelihood of the requesting beneficiary receiving Trust property in the future;
- Whether the information is subject to personal or commercial confidentiality;
- The expectations and intentions of the settlor when the Trust was created as to whether the beneficiaries, and the qualifying beneficiary in particular, would be given information (if known);
- The age and other circumstances of the requesting beneficiary and the other beneficiaries of the Trust;
- The effect of giving the information on the trustees, other beneficiaries of the Trust, and third parties;
- In the case of a family Trust, the effect of giving the information on relationships within the family and the relationship between the trustees and some or all of the beneficiaries to the detriment of the beneficiaries as a whole;
- In a Trust that has a large number of beneficiaries or unascertainable beneficiaries, the practicality of giving information to all beneficiaries or all members of a class of beneficiaries;
- The practicality of imposing restrictions and other safeguards on the use of the information (for example, by restricting who may inspect the documents);
- The practicality of giving some or all of the information to the beneficiary with confidential or sensitive information removed; and
- The nature and context of the request.
Although, as noted, the position around disclosure of information to beneficiaries has been made clearer in the new Trusts Bill, this will not necessarily result in any changes in a practical sense. That is because, to a large extent, the provisions in the Trusts Bill simply incorporate the legal principles that already apply now to a decision about disclosure.
The presumption in the Bill is on disclosure and the Bill makes it clear that trustees will not be able to refuse to disclose information to all beneficiaries. However, trustees will still have the discretion to refuse to disclose information to a vast majority of the beneficiaries. If a beneficiary does not accept a trustee’s decision, an application to the Court for an order that the trustee disclose the information can still be made.
In terms of progress with the draft Trusts Bill, it appears that the Trusts Bill Consultation Team is still considering the submissions that have been made on the Bill and working through some of the issues raised. They have recently been in contact with the Law Society regarding their submission, as well as additional questions on the Bill generally. So progress is being made, but it still likely to be some time before we have a new Act. At this stage it is a matter of ‘watching this space’.
Leone is an Associate in our Dispute Resolution Team, specialising in Estate and Trust Disputes and Relationship Property, and can be contacted on 07 958 7457.