Part 3: Trusts Act 2019: Beneficiaries' rights to information

Thursday 21 November, 2019

This article is the third in our series on the new Trusts Act 2019. Click here to see the first article where we introduce the Act and discuss some important administrative changes. Click here to see the second article where we look at trustees’ duties.

The new Trusts Act clarifies and codifies beneficiaries’ rights to certain trust information to help beneficiaries make sure that the trustees are complying with their duties and the terms of the trust. There is a presumption that trustees must tell all beneficiaries:

• That they are a beneficiary of the trust;
• The name and contact details of the trustees;
• When trustees are appointed, removed, or retire; and
• That they can ask for a copy of the trust deed or trust information.

Trustees have to regularly consider, at reasonable intervals, whether they should be making this basic trust information available, for example, if a beneficiary has just turned 18.

There is also a presumption that trustees have to give beneficiaries trust information within a reasonable period of time if requested. 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 that the beneficiary can enforce the trust. However, trustees do not have to give beneficiaries the reasons for trustees’ decisions. Trustees can require the beneficiary to pay the reasonable cost of providing the information before providing it.

There are a range of reasons settlors and trustees may not want beneficiaries to know about trusts for their benefit, for example, until they have reached a sufficient level of maturity, knowledge of future provision from a trust can have a demotivating effect on the beneficiary concerned.  It will be important to work with the trust’s lawyer to ensure these valid concerns can be appropriately addressed.  Fortunately, there are factors which trustees can consider, which may rebut the presumption of disclosure.

When do the presumptions of access to information not apply?

Before providing any of the information, trustees must consider certain factors. If the trustee reasonably considers that they shouldn’t make the information available to every beneficiary, the trustee may withhold the basic trust information or refuse a beneficiary’s request for trust information.  This means that if the trustee thinks that the beneficiary is unlikely to ever receive a distribution from the trust, the trustee can decide not to give them any information about the trust.

Other factors that the trustee must consider are:

• 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.

What if a trustee withholds information?

If a trustee decides to withhold all the basic trust information from all the beneficiaries or decides to refuse a beneficiary’s request for trust information, the trustee has to apply to the court for directions whether the decision was reasonable. The trustee must also ask the court for an alternative way to hold the trustee 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.

The requirement to provide basic trust information to all beneficiaries applies to all trusts from 30 January 2021. If you would like further information on the implications of these requirements, please contact our Private Client & Trusts team.