A beneficiary approaches you as trustee and requests trust information.  Do you comply with this request?  The starting point is that a trustee has an obligation to administer the trust fund in accordance with the trust deed and has a duty to account to beneficiaries.  This is the basis on which beneficiaries will seek disclosure of trust documentation.  At common law beneficiaries do not have a mandatory “right of information” in regards to trust information but a mere expectation that basic trust information will be disclosed to a beneficiary who wants it.

Whether or not the trustees are required to disclose trust information to a beneficiary depends on the terms of the trust deed and also the circumstances surrounding the request for trust documents or information.  In a recent case (Erceg) the Court outlined a useful list of matters that need to be considered when a beneficiary requests trust information. These include:

• The nature of the documents sought, which may need to be evaluated separately;

• The context for the request and the objective of the beneficiary in making the request;

• The nature of the interests held by the beneficiary seeking access;

• Whether there are issues of personal or commercial confidentiality;

• Whether there is any practical difficulty in providing the information;

• Whether the documents sought disclose the trustee’s reasons for decisions made by the trustees;

• The likely impact on the trustee and the other beneficiaries if disclosure is made;

• The likely impact on the settlor and third parties if disclosure is made;

• Whether disclosure can be made while still protecting confidentiality; and

• Whether safeguards can be imposed on the use of the trust documentation.

In this case, the Court refused disclosure of even the most very basic trust documentation, the trust deed.  The features of this case were unusual and the beneficiary’s reprehensible conduct, including a real threat to breach of confidentiality were main factors in the court’s decision to decline disclosure.  However, trustees need to be careful not to misinterpret this case in thinking that they can outright refuse disclosure of trust documents.

In the proposed new Trust Bill currently before parliament, there is a presumption that certain trust information, (including the details of each appointment, removal and retirement of trustees as it occurs), must be available to every beneficiary unless there are circumstances that prevent the presumption applying.  The proposed Bill sets out the factors trustees must consider before deciding whether or not to disclose trust information.  This list expands on the factors outlined in Erceg.

In another recent case it was decided that if legal advice sought by trustees is obtained for the benefit of the Trust and paid for with Trust funds, copies of that professional advice is to be given, if requested, to the beneficiaries.

Trustees need to be very careful when considering a request from a beneficiary for trust information.  With each request, trustees should consider the above list first before deciding whether or not to disclose trust information.  Each piece of information or document sought should be assessed on its own against this list at the same time remembering disclosure needs to be in the best interests of all of the beneficiaries not just the beneficiary requesting disclosure.