Trusts / Asset Planning
The Trusts Act codifies beneficiaries’ rights to certain trust information to help beneficiaries ensure that the trustees are complying with their duties and the terms of the trust. There is a presumption that the trustees must disclose basic trust information to every beneficiary and trust information to beneficiaries who request it. In the case of beneficiaries who are minors or who lack capacity, the information must be given to a parent, guardian, attorney, or property manager.
Rights to information
Basic trust information that the trustees must give to all beneficiaries includes:
- The fact that a person is a beneficiary.
- The name and contact details of the trustees.
- The occurrence of, and details about, any change to the trusteeship.
- The right of a beneficiary to ask for a copy of the trust deed or trust information.
The obligation to make this information available is an ongoing one. The trustees are required to consider at reasonable intervals whether they should be making the information available.
Trust information is information about the terms and administration of the trust, and the trust property, that is reasonably necessary for the beneficiary to have the trust enforced. However, trustees do not have to give beneficiaries the reasons for their decisions concerning the trust. Trustees can also require beneficiaries to pay in advance the reasonable cost of providing the information.
Prior to disclosure
Before providing any of the information, trustees must consider certain factors. If the trustees reasonably consider that they should not make the information available to every beneficiary, they may withhold the basic trust information or refuse a request for trust information from all or certain beneficiaries. For example, in a case where the trustees think that the beneficiary is unlikely ever to receive a distribution from the trust, they can decide not to give them any information about the trust.
It will be important for the trustees to work with the trust’s lawyer to ensure that the settlors’ and the trustees’ concerns are appropriately addressed, and the legislation adhered to.
Other factors that the trustees must consider are:
- Whether the information is confidential;
- The settlors’ intention when the trust was created, including whether the settlors intended beneficiaries to get information;
- The beneficiaries’ ages and circumstances;
- The effect on the beneficiaries and third parties, of giving the information, and the effect on family relationships;
- For trusts with many beneficiaries, whether it is practical to give information to all beneficiaries;
- Whether it is practical to place restrictions or safeguards on how the beneficiaries can use the information or to redact some of the information;
- The nature and context of a beneficiary’s request for information.
The trustees must take into account the expectations and intentions of the settlor on establishment of the trust in making decisions about provision of the basic trust information and trust information following a request. The Settlor should ensure that his/her expectations and intentions are expressed clearly in the trust deed or memorandum of wishes. For example, a settlor may not want the younger beneficiaries to know that they are beneficiaries of a trust until they reach a certain age.
Court directions required where no information is disclosed
In certain situations the trustees must apply to the court for directions as to whether a decision to withhold was reasonable and to determine an alternative means by which the trust may be enforced, and the trustees held accountable. This applies where:
- no beneficiary has any information because the trustees cannot identify any beneficiary to whom information can be given; or
- the trustees decide to withhold all basic trust information from all beneficiaries for more than 12 months or a request for information is refused.
It is likely that these new rules, which require positive action on the part of trustees, will bring about a change to the way many trusts operate.
The contents of this publication are general in nature and are not intended to serve as a substitute for legal advice on a specific matter. In the absence of such advice no responsibility is accepted by Brookfields for reliance on any of the information provided in this publication.
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