Beneficiary Information
Under the new Act, there are two categories for trust information:
- Basic Trust Information; and
- Trust Information
Trustees are expected to give Basic Trust Information about the Trust to all beneficiaries (or their representative). This information includes:
- The existence of the Trust and that they are a beneficiary
- The names and details of the Trustees, and any changes to the Trustees when these occur; and
- The beneficiaries right to request a copy of the Trust Deed and Trust Information.
Trust Information, which can be requested by the beneficiaries, includes the terms of the Trust, the administration of the Trust or the Trust property and information that is reasonably necessary for the beneficiary to have to enable enforcement of the terms of the Trust and the Trustees duties. But this information does not include the reasons for Trustees decisions. The information above which beneficiaries or their representative can request includes details of the Trust’s assets, along with information on what distributions and loans the Trust has made and to whom. The increased level of disclosure may be of concern to some settlors, especially if they have not previously disclosed to beneficiaries, such as their children or grand-children, that they are a beneficiary of the trust, or if the Trust has a wide class of beneficiaries including multiple generations and their spouses. In some cases we have seen trust deed which include reference to “any relative” which is very far reaching. Before giving out Trust Information to beneficiaries, the Trustees should consider a number of factors which are set out in the Act. Some of the factors to consider include:
- The nature of the interest in the trust of the beneficiary
- Commercial or personal confidentiality
- The intentions and expectations of the settlor at the time of setting up the Trust
- The effect of giving the information to the beneficiary, this includes the impact on the family relationship and the relationship with other beneficiaries
- If the trust has a large number of beneficiaries, whether it is impractical to give all beneficiaries information
Trust Records
Trustees are also expected to retain copies of core Trust records. These can be paper or electronic copies and include the following:
- The Trust Deed and any other documents which contain the terms of the Trust
- Amendments and variations to the Trust Deed or Trust
- Documents for the appointment, removal and discharge of Trustees
- Records of the Trust property which identify the Trust assets, liabilities, income, and expenses which are appropriate to the value and complexity of the trust property
- Any record of Trustee decisions
- Any written contracts entered into
- Accounting records and financial statements
- Memorandum of wishes from the settlor
- Any other documents necessary for the administration of the trust
- Any documents referred to above that were kept by a previous Trustee and passed onto the current Trustee
Each Trustee must keep copies of the Trust Deed and variations and have access to all the other trust records.
Mandatory Duties
The Trust Act 2019 sets out a number of Mandatory and Default Duties for Trustees. The Mandatory Duties are as follows:
- Know the terms of the trust
- Act in accordance with the terms of the Trust
- Act honestly and in good faith
- Act for the benefit of the beneficiaries; and
- Exercise Trustee powers for a proper purpose
The following default duties must be performed unless they are modified or excluded in the Trust Deed (or by way of a subsequent variation of the Trust Deed):
- Exercising reasonable care and skill in administering the trust
- Investing prudently
- Not exercising their power for their own benefit
- Act impartially between beneficiaries
- Not profit from the Trusteeship of the Trust
- Act unanimously with the other Trustees
- Regularly and actively consider the exercise of Trustee powers
- Not bind or commit trustees to the future exercise or non-exercise of discretion
- Avoid conflicts of interest between beneficiaries and trustees
- Not take reward for being a trustee
If you would like to discuss these changes and the impact they will have on your Trust, please do not hesitate to be in touch.
