Disclosure of Trust Information to Beneficiaries

To disclose, or not to disclose – that is the question for trustees.

New Zealand’s new trusts legislation, the Trusts Act 2019 (Act), came into force on 30 January 2021.

One aspect of the Act that some clients find concerning is the ways that beneficiaries can receive information about a trust. We set out below an explanation of what the information provisions are and what trustees should be doing to comply with their duties under the Act.

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.
The sections regarding the provision of trust information to beneficiaries under the Act create presumptions, not requirements. The Act acknowledges that it may not always be appropriate to provide information and so both presumptions can be rebutted if that is appropriate in the circumstances.

Before providing any information, trustees should consider all of the factors set out in section 53 of the Act. If, taking these factors into account, the trustees reasonably consider that information should not be provided then the presumption does not apply and the trustees can withhold information from one or more of the beneficiaries. This applies to both presumptions.

The factors that trustees must consider are:

  • the nature of all beneficiaries’ interests in the trust, including the degree and extent of the beneficiary’s interest in the trust and the likelihood of the beneficiary receiving trust property in the future;
  • whether the information is subject to personal or commercial confidentiality;
  • the expectations and intentions of the settlor at the time the trust was set up (if known) on disclosure;
  • the age and circumstances of all of the beneficiaries;
  • the effect on all of the beneficiaries, the trustees and third parties if information is provided;
  • in the case of a family trust, the effect of giving the information on relationships within the family and the relationship between the trustees and some or all of the beneficiaries to the detriment of the beneficiaries as a whole;
  • the practicality of giving information
  • the practicality of imposing restrictions and other safeguards on the use of the information
  • the practicality of giving some or all of the information to the beneficiary in redacted form;
  • if a beneficiary has requested information, the nature and context of the request; and
  • any other factor that the trustee reasonably considers is relevant to determining whether the presumption applies.

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 if 12 months has passed since the beneficiaries request.

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.

Trustees should consider who the beneficiaries of the trust are and whether the trustees have sufficient information about the beneficiaries to consider the factors set out in section 53 of the Act and, if not, try to obtain this information. Trust deeds should also be reviewed to consider any disclosure requirements in the deed.

Trustees should be proactive by preparing letters providing the basic trust information and sending these out now.

If you have questions as a trustee or beneficiary of a trust – contact Foundation Legal now.