Providing Information to Beneficiaries under new Trust laws

A retired couple were trustees of their family trust and were aware that there had been changes to trust law that required them to give information to beneficiaries of their trust. One of their adult children, who was a beneficiary of the trust, had trouble managing money. They were concerned about providing any information about the trust’s assets to him, so took legal advice about their position.

There are two different requirements in the new Trusts Act 2019, which came into force in January this year, regarding the release of information to beneficiaries. We explain these below.

Basic Trust information

Under the new law, Trustees are required to provide beneficiaries with basic information about the Trust. There was no such provision in the previous law.

Basic Trust information is defined as:

• The fact that a person is a beneficiary of the Trust;
• The name and contact details of the trustee/s;
• The occurrence, 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 Trust Deed and trust information.

The Act requires this information to be provided to beneficiaries at ‘reasonable intervals’. We would expect this to be at least every 12 months and would suggest that Trustees consider at their annual meetings whether they should be providing such information to beneficiaries.

There is a presumption that this information will be provided (without the need for a beneficiary to request it), however, trustees can consider the factors detailed below before providing information.

If you are not providing any basic trust information to any beneficiary, there is a requirement to apply to the Court for directions.

Other Trust Information – upon request

If a beneficiary requests it, Trustees are also required to give other trust information to beneficiaries. Trust Information is defined as “information regarding the terms of the trust, the administration of the trust, or the trust property that it is reasonably necessary for the beneficiary to have to enable the trust to be enforced”. This is likely to be information such as financial statements, trust documents, and gifting documents.

The Act sets out a number of factors for Trustees to consider when deciding whether or not to give some or all of the requested information to the beneficiary. These factors include:

•  Whether there is any personal or commercial confidentiality involved;
•  The age and circumstances of the other beneficiaries;
•  The age and circumstances of the beneficiary requesting the information;
•  The effect on the beneficiary of giving the information;
•  The effect on family relationships and relationships between the trustees and the beneficiaries as a whole;
•  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 practicality of giving some or all of the information to the beneficiary in redacted form; and
• The practicalities of providing information where there is a wide class of beneficiaries.

The Act also allows the Trustees to ask for payment from the requesting beneficiary to cover the reasonable costs of providing such information.

How would the trustees deal with a request?

In the above example, if the couple’s son was to request information, the trustees would be entitled to have regard to the above factors, in particular the effect on the beneficiary of giving the information. They may, for example, decide to withhold financial information showing the value of the trust’s assets, but provide the trust deed and other non-financial information.

If the Trustees decided not to provide any requested trust information to beneficiaries or information in redacted form, we recommend a trustee resolution recording this (and the reasons for not doing so) so they had proper records if this is ever challenged by a beneficiary in Court.

Consider who your beneficiaries are

Given these new obligations, it is a good time to consider who the beneficiaries of your trust are, as you will have obligations to provide information to those beneficiaries. Some Trusts will have very wide classes of beneficiaries (e.g. grandchildren, siblings, nieces, and nephews) or lists of beneficiaries who the trustees may not want to disclose information to. Many trustees are therefore narrowing their classes of beneficiaries to only those who they realistically expect to benefit from the trust.

If you are a trustee, it pays to be aware of these changes so you know your obligations and to make any changes to your trust deed that may be needed as a result of the changes to the law.