What is a trustees duty to disclose trust documents to a beneficiary?
A brief guide to a trustees duty to disclose trust documents to a beneficiary. For further guidance you can contact our free legal helpline on 0808 139 1599 or send us an email.
30 years ago Gladys Tamplin set up a trust for the benefit of her children and grandchildren. Three of Ms Tamplin’s grandchildren were concerned about how the trust was being administered. They believed distributions of money had been made to other beneficiaries and not them. They also wanted to know what the trustees were doing in relation to land owned by the trust which had planning potential and was now worth as much as £10m.
This was a particularly interesting case as there was no existing legal authority in relation to a trustees duty to disclose documents to a beneficiary. The beneficiaries sought, amongst other documents, full trust accounts, copies of tax advice received by the trustees in relation to the trust and documentation and information relating to and explaining the basis upon which distributions had been made. They also asked for disclosure of legal advice which the trustees had obtained.
The trustees initially denied that the claimants were beneficiaries at all and then put forward a series of hopeless arguments against giving them what they wanted.
The judge agreed that in general terms the claim should succeed. He described the trustees as having taken “an extreme and in my judgment indefensible approach to disclosure in this case“. He commented that if they had taken a less confrontational and more co-operative approach at the outset, the litigation could have been avoided and fewer documents would have needed to be disclosed. He suggested that the trustees had either been correctly advised, but had refused to accept the advice, or were simply badly advised and followed that advice. Either way, he concluded that they had brought the litigation upon themselves and must take the consequences which would follow.
The judge confirmed that beneficiaries have the right to hold trustees to account for their stewardship of a trust fund and their performance of the trust obligations. It is not sufficient for the trustees to dismiss legitimate requests from beneficiaries on the basis that the trustees themselves believe the beneficiaries already have sufficient information.
The court also rejected the argument that legal advice given to trustees is privileged, unless it was provided for example in relation to an alleged breach of trust and had been paid for by the trustees themselves.