Disclosure of Trust Information to Beneficiaries under the Trusts Act 2019

Disclosure of basic trust information

Section 51 of the Trusts Act 2019 (the Act) creates a presumption that “basic trust information” will be supplied to every beneficiary of a trust and “trust information” to any beneficiary who requests it.

Basic trust information is:

• informing each beneficiary that they are a beneficiary of the trust; 

• the trustees’ name and contact details; 

• the occurrence of, and details of, each appointment, removal and retirement of a trustee as it happens; and 

• the right of the beneficiary to request a copy of the trust deed or trust information. 

The obligation to make this information available is an ongoing one and the trustees are required to consider at reasonable intervals whether they should be making the information available. 

Section 53 of the Act provides a list of factors to guide trustees in deciding whether either to provide basic trust information or trust information to a beneficiary. If after careful consideration of the factors the trustees decide that the information should not be made available to every beneficiary, the trustees may decide to withhold some or all of the information from one or more beneficiaries or classes of beneficiaries. Trustees must consider these factors very carefully to ensure they are complying with their trustee duties. There is an expectation under the Act that trust information will be withheld from all beneficiaries only in exceptional circumstances.

Disclosure of trust information when requested

The Act also creates a second presumption that if a beneficiary asks for “trust information”, the trustee should provide it. Trust information is any information regarding the terms of the trust, the administration of the trust or the trust assets that is reasonably necessary for the beneficiary to have to enable the trust to be enforced. This could include, for example, copies of the trust accounts. When considering whether to provide other trust information when requested by a beneficiary a reactive approach is stated in the Act. This means it is left to the trustees to decide how to respond to a request from a beneficiary for other trust information. The trustees should consider the list of factors set out in section 53 of the Act as well as the context of the request for information. If the trustees decide after carefully considering all the factors that the information should not be disclosed to the beneficiary, then they can refuse the request. It is important that trustee take legal advice to ensure they have complied with their duties under the Act. 

Neither basic trust information nor other trust information incudes disclosure of trustee reasons for decisions. This enables trustees to maintain confidentiality around their decisions. 

What if the trustees decide not to disclose?

If the trustees do not provide any beneficiary with basic trust information then an obligation arises for the trustees to apply to the High Court for directions. This obligation applies if no beneficiary can be identified, if the trustees have decided not to disclose basic trust information to any beneficiary, or if the trustees have declined a request for information from a beneficiary.

The application for directions does not need to be made if the period during which no beneficiary has any trust information is less than a year and at the end of that period the trustee gives to at least one beneficiary of the trust the basic trust information. 

Conclusion

Disclosure of information can be troubling for many settlors and trustees who may have concerns that children or extended family who become aware of their status as a beneficiary may feel entitled to immediate provision. However, providing basic trust information can be an opportunity to set expectations and give a beneficiary context to why the trust was set up in the first place - for example creditor protection purposes or future estate planning reasons. It is important to also remember that when providing beneficiaries with trust information there can often be safeguards available to protect confidentiality such as giving some or all of the information to a beneficiary in redacted form, and also that trustees can decide not to disclose, although this requires careful consideration.

Given the Act is now in force, trustees should be creating processes to consider which beneficiaries should receive basic trust information and what steps they should take if further trust information is requested. 

If you are a trustee or beneficiary of a trust and are unsure of your obligations and/or entitlements or have other questions or concerns regarding your family trust, contact Kerry Reed from our specialist commercial team, kerry@dtilawyers.co.nz.