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Beneficiaries rights to information

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Posted by Katie Alsop on 07 August 2017

Katie Alsop - Will Disputes Lawyer
Katie Alsop Partner

A trust is an arrangement where one party (a settlor) gives the benefit of assets to another party (a beneficiary) while control and decisions relating to those assets lie with another party (the trustee).

There are some circumstances in which a person might want to see certain trust documents to clarify what they may be entitled to, whether that is now or in the future. Similarly, a trustee may not know whether they should, or are even allowed, to release the information or documents requested.

Below are the most frequently asked questions we see when we are dealing with the disclosure of trust documents and information.

Please note; you should always seek legal advice from an expert because its own facts will determine each matter.

I am a beneficiary of a trust but have no information relating to the trust. Do I have a right to request and obtain information?

You are not entitled to see trust documents simply because you are a beneficiary. However, a trustee owes certain duties to you, including keeping you informed and to provide you with accounts. It is therefore not unreasonable for you to request, and expect to receive, trust documents.

It is also your right to have a trust administered in accordance with the trust document and general law. What documents and information you require to achieve this is dependent on what kind of beneficiary you are and what type of trust you benefit under:

  • If you have the right to receive income from the trust during your lifetime, or a right to live in a property owned by the trust for your lifetime, you are entitled to know that the trust exists and the nature of your interest.
  • The position is similar if you may benefit under the trust in the future, for example where you will only benefit on the condition that you reach 25, or upon the passing of another beneficiary. However, if a trustee believes that the event will not occur during your lifetime, you may struggle to assert your rights to information.
  • A discretionary trust is a trust in which your interest is not fixed, but is at the sole discretion of the trustees. The trustees decide whether or not you will ultimately benefit. You will only be informed of the nature and existence of your interest if you are a real potential candidate for benefiting under the trust.

I believe I have the right to obtain information. How do I do this?

The first step is to ask the trustees for the information, which does not require the involvement of the Court. If the trustees are agreeable to this, it is normal for you to pay any necessary photocopying charges.

If the trustees refuse, you can consider making an application to the Court. If your application is unsuccessful, you could be liable for the costs of the application (including the trustees’ costs). Equally, the trustees may be liable for costs if you are successful and the Court thinks the trustees’ refusal was unreasonable. Alternatively, the costs could be payable out of the trust if the Court considers this appropriate.

I am a trustee. How should I deal with a request for information by a beneficiary?

If a beneficiary requests information about the trust, you should bear in mind that the beneficiary has no entitlement as of right. You have discretion and should conduct a balancing exercise, considering all the relevant circumstances at the time. It would be best if you considered what is in the best interests of the beneficiaries as a whole and what the purpose of the request is.

What should I disclose to a beneficiary if requested?

Generally speaking, you should disclose the following to beneficiaries:

  • the trust document and other documents appointing/retiring trustees or changing/adding assets to the trust; and
  • the trust accounts. If you fail to do so, a beneficiary can seek the accounts via the Court. In such circumstances, you run the risk of being ordered to pay personally (not from the trust fund) the costs of the beneficiary obtaining the order. You should exercise caution if a beneficiary seeks disclosure of trust accounts if you are concerned it may be to attack the trust.

What do I not have to disclose?

Generally speaking, and provided you can justify not disclosing a document, you do not have to disclose the following:

  • if applicable, the settlor’s letter to you setting out their wishes in relation to the trust. However, you should not refuse disclosure simply because the settlor has requested that the letter remain confidential;
  • documents about the exercise of your powers and discretions; and
  • legal advice. You should exercise your discretion carefully, particularly if the advice relates to reasons for the exercise of your powers and discretions or a dispute between you and a beneficiary. You are not required to disclose the legal advice you obtain in order to defend a claim for breach of trust.

How can I justify not disclosing a document?

You should consider whether:

  • there is a legal reason to refuse disclosure (for example, if a document contains privileged legal advice);
  • there is a commercial reason to refuse (for example, if a document contains commercially sensitive information);
  • the document is confidential (for example, it might be relevant to one beneficiary but not another);
  • disclosure is impractical or too costly;
  • the beneficiary has only a theoretical possibility of benefiting from the trust; and
  • the information has been requested for an improper purpose (such as challenging the validity of the trust, which would not be in the interests of the beneficiaries as a whole).
  • However, before refusing disclosure, you should consider other options available to you. These include:
  • offering redacted documents; 
  • offering to release the documents to the beneficiary’s advisers, rather than to the beneficiary; and
  • requesting an undertaking in relation to the use of the information disclosed. 

If there is no good reason to refuse, you ought to disclose the information or documents. There is a risk you will incur personal liability for the costs a beneficiary incurs if they apply to the Court for disclosure.

If you are unsure whether to disclose information, you can apply to the Court for its directions, provided that you can justify incurring the costs doing so.

About the author

Katie specialises in contested wills, disputed estates and the removal and substitution of executors.

Katie Alsop

Katie specialises in contested wills, disputed estates and the removal and substitution of executors.

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