Beneficiary Rights

A key objective of the Trusts Act 2019 (“the Act“) was to provide further transparency for beneficiaries of trusts.  The Act in fact records that trust information may be withheld from all beneficiaries only in “exceptional circumstances”.

Under the current law, a trustee must assess at reasonable intervals whether “basic trust information” should be provided to all beneficiaries.  Basic trust information being:

• the fact that a person is a beneficiary of the trust; and
• the name and contact details of the trustee; and
• 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.

In deciding whether to provide basic trust information or any other requested information, a trustee is entitled to consider a wide range of factors, with the more significant being:

• the likelihood of the beneficiary receiving trust property in the future;
• the expectations and intentions of the settlor at the time of the creation of the trust (if known) as to whether the beneficiaries as a whole, and the beneficiary in particular, would be given information;
• the age and circumstances of the beneficiary and also other beneficiaries;
• if a beneficiary has requested information, the nature and context of the request.

Finally, the trustee is given the protection of being able to rely on “any other factor that the trustee reasonably considers is relevant to determining whether the presumption applies”. 

If however a trustee decides to withhold information, they will in most cases have an obligation to apply to the High Court to confirm that the withholding of information is reasonable. 

The Court’s approach was set out in Lambie Trustee Ltd v Addleman, where the Supreme Court held that “information generated or held for the purposes of a trust — that is information held by trustees as trustees — is not the personal property of the trustees”.  The Supreme Court ordered disclosure of trustee information including legal advice given to the trustees relating to the general administration of the trust.  However, the trustee was “entitled to assert privilege in legal advice received after the commencement of proceedings”.

It was noted that the Court “expect[s] that trustees would normally provide to close beneficiaries on request, if not proactively, trust accounts and other documents showing how the trust had been administered and what had become of the trust property”.  Disclosure of a trust deed and trust accounts is likely the minimum required to scrutinise the trustees’ actions in order to hold them to account.

There is however a distinction between providing Trust information and providing disclosure of trustees’ reasons for particular decisions.  The Act expressly excludes “reasons for trustees’ decisions” from the definition of trust information in section 49 and therefore a beneficiary cannot always expect an explanation as to why a particular decision has been made.

To seek clarity around what the requirements for proactive and transparent disclosure mean for you, as a trustee or as a beneficiary, reach out to our Dispute Resolution Team.

Daniel Shore leads our Dispute Resolution Team and can be contacted on 07 958 7477.