What rights to information does a beneficiary have?

A beneficiary has the right to be able to ensure that a trust is administered legally and in accordance with its terms. We look here at what they need to know and how they can obtain the information they need.

Who has a right to information?

Anyone with a potential interest in a trust can request information relating to it – whether they receive it or not depends on whether there is a real probability that they will obtain a benefit under the trust. So both current and future beneficiaries are always likely to receive trust information, but contingent and discretionary beneficiaries may have more difficulties.

What does that right cover?

Trustees are under a fiduciary duty to keep the beneficiaries informed about the trust and provide certain documentation. However, a beneficiary does not have an automatic right to information and a trustee has wide discretion over which information it discloses. This will vary widely, but will reflect what is deemed necessary for the beneficiary to properly supervise and enforce the trust. The courts have stated that, as a minimum, this will include:

• Documents evidencing the existence of the trust;
• Details of the beneficiary’s interest under the trust;
• A copy of the trust documents (i.e. deeds, variations, accounts).

What can be disclosed?

• The trust document – a key document which trustees should disclose together with any supplemental documents such as deeds of appointment, instruments adding assets to the estate and variations to the trust. They can redact (or conceal) information on these documents not relating to the beneficiary concerned.
• Trust accounts – trustees have a duty to keep clear accounts and should be able to provide a copy upon request. If they refuse, a beneficiary can apply in court for disclosure of this document, and seek the costs of such action from the trustee personally.
• Deceased’s letter of wishes – if the deceased has left a letter to the trustees setting out their wishes in relation to how the trust should be dealt with, they should take those into account but do not have to comply with them. Often, these letters are confidential and will not be disclosed, but a court can order that.
• Legal advice – legal advice obtained by trustees and paid for from the trust fund is privileged, but it can be disclosed to the beneficiaries. If the legal advice relates to a dispute between the trustees and beneficiaries, or is paid for personally by the trustees, it is privileged and a beneficiary is not entitled to see it.

When can a trustee refuse to disclose information?

Trustees can refuse to disclose information on numerous grounds, including that the disclosure process will be too costly or too time consuming; the beneficiary only has a speculative benefit potentially arising under the trust and/or the information is subject to legal privilege. They can also offer disclosure on a conditional basis by offering redacted documents or asking for an undertaking as to how the information will be used. They do not have to explain why they are not disclosing information – a beneficiary may need to go to court to press for disclosure.

How can a beneficiary obtain this information?

The first step is to write to the trustees to formally request the information and agree to meet the trustees’ costs of copying and providing it. If they refuse or don’t reply, then a beneficiary has the following options:

• Application for pre-action disclosure – only if a beneficiary has not yet started proceedings against the trust. A beneficiary must demonstrate that they and the trustee will be a party in subsequent proceedings, and the documents requested will assist in the just disposal of any subsequent proceedings;
• Court proceedings –an application to the High Court, Chancery Division. This is the more appropriate route where an application for disclosure is likely to be strongly opposed and it is necessary for a court to determine whether a) the beneficiary is actually entitled to the information and, if so, b) whether the trust has a good reason for refusing the same;
• Specific disclosure – If a beneficiary has already started proceedings against a trustee, disclosure is usually limited – the trust is only required to disclose documents in its control, on which it relies or which adversely affect or support another party’s case. But if a beneficiary believes that there are classes of documents which the trustee is withholding, they can apply for an order that these documents be disclosed and/or made available for inspection.

Costs

As a general rule, if the application is unsuccessful, in addition to paying its own legal costs a beneficiary will be ordered to pay the trustees’ legal fees. But if the application is successful and the court considers that a trustee acted unreasonably in refusing to disclose the information, it is likely to order the trustee to personally pay the beneficiary’s legal costs. Alternatively, the costs could be payable out of the trust if the court considers it appropriate.