Beneficiaries obtaining information from trustees
For many beneficiaries it can be frustrating and confusing as to what information they are entitled to receive from the trustees of a Trust.
From a trustee’s point of view disclosing information can have consequences, so they need to be sure as to what they can disclose. This can lead to delays and in some cases the unreasonable withholding of information.
The ambiguity is down to the fact that the relationship between a trustee and beneficiary is not a legal contract. Rather, the trustee who holds the trust assets and information has a duty is to deal with the trust in the best interests of the beneficiaries. This inevitably leads to grey areas arising, where the involvement of solicitors becomes necessary.
Where there is a dispute over obtaining information from trustees, the courts are now tending to favour the beneficiary.
The case law is showing a move away from the beneficiary being required to provide the proprietary basis for their request for information, to the right of a beneficiary to police the trustees in the due administration of the trust.
In the case of Schmidt v Rosewood Trust Ltd , the trustees argued that the beneficiary could not have a proprietary interest in the trust information, but the court disagreed and said the information should be rereleased.
Documents which are disclosable to a beneficiary are:
- the constitutional documents; including the trust document and documents which appoint/retire the trustees. It is always worth checking whether those appointed as trustees were correctly appointed.
- The trust accounts; these should be readily available to the beneficiary on demand and without delay. The level of detail on the accounts will vary from case to case, and must be proportionate.
Regarding those trusts which have an underlying company which makes decision at board level, there is no automatic right to the information. The beneficiary would need to show why the information is needed, and there may be some confidentiality issues. Nonetheless, the beneficiary should not give up too easily, as the court may allow disclosure of that information.
Similarly, as regards a Letter of Wishes of the Settlor (the person who created the trust), those are confidential and are not disclosable to a beneficiary as a right. However, the court can order that it is disclosable in certain circumstances.
The case of Schmidt v Rosewood Trust Ltd does not allow trustees to seek information from a third party, only between a beneficiary and trustee. As an alternative, the beneficiary could potentially make a claim for Pre-Action Disclosure under Civil Procedure Rules Part 64 which can include third party information.
Another powerful route for a beneficiary in obtaining information from trustees, is to make a Subject Access Request. Subject Access Requests can produce interesting results, such as correspondence/documents between trustees expressing opinions of the beneficiary which may even be derogatory. Moreover, legal advice given to the trustees regarding the trust can be disclosable to the beneficiaries. The usual response from the trustees is that the legal advice is confidential as it is covered by ‘legal privilege’, but they may be unaware the trustees and beneficiaries are within that same group of those privileged persons, and it is therefore disclosable to the beneficiaries. Equally advice given by accountants, tax advisers and other experts to the trust can also be disclosable. Even legal advice given to the trustees regarding a dispute prior to Court Proceedings being issued may be disclosable to a beneficiary.
We specialise in trust disputes. Here are some of the other helpful pieces we have published on this website:
Disputing a discretionary trust
Discretionary trusts and executor disputes