Beneficiaries’ Rights To Information Under The Trusts Act 2019
This is the second article on the new Trusts Act 2019 with the first article having appeared in the Winter edition of this newsletter.
The Trusts Act 2019 (“the Act”) sets out various provisions relating to the disclosure of information to beneficiaries. The Act largely reflects a 2017 decision of the Supreme Court in Erceg v Erceg. However, the Act also introduces some new requirements that impose additional obligations on trustees in relation to the provision of information concerning the trust to beneficiaries. These requirements will apply to existing trusts as only trusts established after the commencement of the Trusts Act 2019 in January 2021. Therefore, trustees of all trusts need to ensure that they are familiar with and comply with these obligations.
Categories of Information
The Act introduces two key categories of information that may be available to beneficiaries.
The first category is “trust information”, which is defined as any information regarding the terms of the trust, the administration of the trust or the trust property as may be reasonably necessary to enable the beneficiary to enforce the terms of the trust. Importantly, however, there is no change to the present position in relation to trustees not being required to give reasons for their decisions.
The second category of information is referred to as “basic trust information,” which is defined as follows:
- That a person is a beneficiary of the trust;
- The names and contact details of the trustees;
- Details of the appointment, removal and retirements of trustees as they occur;
- The beneficiary’s right to request a copy of the trust deed or wider “trust information”.
Presumptions Regarding the Provision of Information
The Act also introduces two key presumptions. The first is that trustees must provide “basic trust information” to every beneficiary. The second is that trustees must provide wider “trust information” to beneficiaries within a reasonable period of time of being requested to do so. These are, however, presumptions. The Act sets out a range of matters that the trustees are required to consider in deciding whether or not the presumption applies. Those factors include:
- The nature of the interests in the trust held by the beneficiary and other beneficiaries, including the degree and the extent of their interest and the likelihood of the beneficiary receiving trust property in the future.
- Whether the information requested is of a personal or commercially sensitive nature.
- The expectations and intentions of the settlor when the trust was created as to whether or not beneficiaries would be given information.
- The age and circumstances of the beneficiary and other beneficiaries.
- The effect on the beneficiary, other beneficiaries, the trustees and third parties of providing information requested.
- In the case of family trusts, the effect of giving information on family relationships and the relationships between the trustees and beneficiaries and whether such effects will be to the detriment of beneficiaries as a whole.
- Where there is a large number of beneficiaries and unascertainable beneficiaries, the practicality of giving information to all beneficiaries.
- The practicalities of imposing restrictions or other safeguards on the use of the information.
- The nature and context of the request for information.
- Any other factors the trustees consider are relevant.
There may be situations where a trustee decides not to provide information, either because the trustee cannot identify any beneficiary to whom the information can be given, or the trustee decides to withhold all basic trust information from all beneficiaries, or to refuse a request for trust information having considered the factors referred to above. In such cases the trustee is required to apply to the Court for directions as to whether the decision is reasonable in the circumstances and whether there are alternative means by which the trustee can be held to account and the trust enforced.
If an application for directions is made, the Court is required to take into account the following principles:
- That trust information may only be withheld from all beneficiaries in exceptional circumstances.
- Alternative means of enforcing a trust, other than by the provision of information to beneficiaries, must be consistent with the objectives of the trust and not adversely affect the administration of the trust.
Whilst those who establish trusts since the Act was passed in 2019 will be doing so with their eyes open to the requirements to provide the beneficiaries with trust information, these requirements may cause some concern for trustees of previously established trusts. In many cases, the settlors of those trusts may not necessarily have wanted beneficiaries to be able to access trust information, or even know that they were beneficiaries of the trust. For example, some beneficiaries (such as wider family members of the settlors) may have been included as a “backstop” to cover the situation for those for whom the trust was primarily to benefit (for example the settlors and their children) were to die during the trust.
Other settlors who may have established trusts may not want beneficiaries to know that they were trustees in case they became less motivated to make their own way in the world as a result of believing that there was a trust fund upon which they might be able to rely. Whilst trustees may still be able to withhold information having considered the factors referred to above, they will need to give careful consideration to those factors in the knowledge that their decision may well be scrutinised by the Court taking into account the presumption that trust information is generally to be made available except in exceptionally circumstances.
Trustees and settlors of trusts who have concerns in this regard should consult us for advice in relation to their particular circumstances. Similarly, beneficiaries seeking information about their entitlement to information should contact us.