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The New Trusts Act 2019

How Much Information Is A Beneficiary Entitled To?

The new Trusts Act has come into effect being the biggest change in trust law in over 60 years replacing the Trustees Act 1956.

One section of the new Act that has many looking into this further is the concept of a Beneficiary’s entitlement to information.

Settlors are unsure what these changes mean for them. There are concerns about not wanting children to know the extent of their family wealth with fears that it may demotivate them. Or what happens if my son or daughter separates from their partner/spouse, can they request information from the Trustees?

Beneficiaries entitlement to information is not a new concept in trust law. It has been emerging in case law for some time. The reason behind this duty on Trustees to hand over information to Beneficiaries is so they can be held to account for their actions as Trustee.

There is a presumption that a Trustee must make available basic trust information to a Beneficiary which is:

  1. The fact that they are a Beneficiary;
  2. The name and contact details of the Trustees;
  3. To be informed when there is a change in Trustees;
  4. A Beneficiary’s right to request a copy of the terms of the trust (the trust deed) and trust information.

 

This basic trust information does not really give the beneficiary a lot. In reality, once a Trustee has provided a Beneficiary with the minimum basic information above, they may be faced with further requests from Beneficiaries requesting information about the assets of the trust, the trust’s financial accounts etc.

You may be wondering if there are any exceptions to having to provide this information to Beneficiaries. Can Trustees refuse to provide information to Beneficiaries when requested?

The answer is yes. Before giving information a Trustee must consider the following:

  1. The nature of the Beneficiary’s interests in the trust;
  2. If the information is confidential;
  3. The expectations and intentions of the Settlor at the time the trust was established;
  4. The age and circumstances of the Beneficiary;
  5. The effect giving information would have on the Beneficiary or family relationships;
  6. The effect giving information would have on Trustees, other Beneficiaries or third parties;
  7. If there are a number of Beneficiaries, the practicality of giving information to all the Beneficiaries;
  8. Can information be given in redacted form;
  9. Other factors.

 

After taking these into account, if a Trustee considers that information should not be made available then the Trustee may withhold information from the Beneficiary.

The starting point is to go back to your trust deed to work out who the Beneficiaries of your trust are. If your trust has been set up recently, chances are your Beneficiaries are listed very narrowly – yourselves, your children and grandchildren.

For Trust Deeds set up some time ago, it was quite common to have an extensive list of Beneficiaries including other family members or even spouses/partners of Beneficiaries, charities and companies.

Depending on the language and intent of the trust deed when it was set up, the list of Beneficiaries in a trust deed may be able to altered or ‘tweaked’ provided it is within the intentions of the Settlor at the time the trust was established.

If you have any queries in relation to your trust deed, to confirm who your Beneficiaries are, or if you’re not sure how to deal with requests for information from a Beneficiary, please don’t hesitate to get in touch with the Collins & May Law team.

Laura Hood

Laura Hood

DD: 04 576 1417 | Email: laura@collinsmay.co.nz