We’re becoming aware that there is some misunderstanding among clients about what the new Trusts Act requires around trust beneficiaries and their rights. We outline some key facts to help clarify any confusion.
The overriding aim of the new Trusts Act 2019, that comes into effect on 31 January 2021, is to provide more clarity and transparency around trusts. This includes clarifying beneficiaries’ rights to certain trust information to help those beneficiaries enforce the trust i.e. so they can be sure that the trustees are complying with their duties and the terms of the trust.
What trust information should be shared
Trust information is any information regarding the trust deed, trust administration, or trust property that it is reasonably necessary for the beneficiary to have, so they can enforce the trust.
Giving information to beneficiaries
It is expected that trustees must tell all beneficiaries or their representatives:
- That they are a beneficiary of the trust
- The name and contact details of the trustees
- When trustees are appointed, removed, or retire
- That they can ask for a copy of the trust deed or trust information.
However, before sharing the above information, the trustees need to consider the following factors, which may result in them not sharing the above information to any particular beneficiary or in fact, all beneficiaries (but this latter decision has further implications that we cover later in this article).
Factors that trustees need to consider before sharing information
- The nature of the beneficiaries’ interests and the likelihood of receiving trust property
- Whether the information is confidential
- The settlor’s intentions when the trust was created, including whether the settlor intended beneficiaries to get information
- The beneficiaries’ ages and circumstances
- The effect on the beneficiary, other beneficiaries, and third parties, of giving the information, and the effect on family relationships
- For trusts with lots of beneficiaries, whether it is practical to give information to all beneficiaries
- Whether it is practical to place restrictions or safeguards on how the beneficiary can use the information or to redact some of the information
- The nature and context of a beneficiary’s request for information.
Giving beneficiaries additional trust information
Before providing additional information to beneficiaries on request, trustees need to consider the points outlined above. If the decision is to not provide information, the trustees do not have to give the reasons for this decision.
Trustees can require the beneficiary to pay the reasonable cost of providing the information before providing it.
Why information may not be shared
There is a range of reasons trustees may not want certain beneficiaries to know about trusts for their benefit, for instance:
- Until they have reached a sufficient level of maturity
- Knowledge of future payment from a trust may can have a demotivating effect on the beneficiary concerned.
Trustees will need to work with the trust’s lawyer to be sure these valid concerns can be appropriately addressed.
What if trustees withhold information?
If trustees decide to withhold all the basic trust information from all the beneficiaries or decide to refuse a beneficiary’s request for trust information, the trustees will need to apply to the court for directions as there will be no means by which they can be held accountable. I.e. the beneficiaries will not have sufficient information to enforce the trust.
The court will need to determine an alternative way for the trustees to hold themselves accountable and enforce the trust.
In giving directions, the court must keep in mind that trust information should only be withheld from all beneficiaries in exceptional circumstances, and that the alternative way to enforce the trust must be consistent with the trust’s objectives and not adversely affect its administration.
There are many aspects to the new Trusts Act 2019 that are complex. Moore Markhams is committed to ensuring our clients are supported in your decision making around your trusts and their ongoing validity.
If you have any concerns or queries around the matters raised in this article,
please get in touch.