Trustees’ duty to give information to beneficiaries
It can be flattering to be asked by a relative or close friend to be a trustee of their estate, but this is a role with important legal obligations and disputes can arise when beneficiaries do not agree with the actions of trustees. One such area of potential disagreement is the amount of information that is circulated to beneficiaries.
Deborah Adams, Director of Private Client Services with Parnalls Solicitors explains that ‘trustees have a duty to account to the beneficiaries and to provide information about the trust to them. These are vital tools in the beneficiaries’ armoury when holding trustees to account, and this can be important if there is any suspicion that trustees are acting improperly.’
A trust may be set up to protect money or property while it continues to benefit certain people (the beneficiaries). For example, a trust of property may be available for named adult children to live in, or a trust fund may pay for the beneficiaries’ university fees. The fund or property is managed by the trustees who must administer the trust in accordance with clear legal principles.
Each trustee owes specific duties towards the beneficiaries including the duty of good faith, to act in accordance with the trust deed and they have an obligation to account to the beneficiaries for their stewardship of trust assets.
Keeping beneficiaries informed
In discharging these legal responsibilities, as a trustee you have an important duty to keep the beneficiaries informed.
The trustees must keep accounts and provide them to the beneficiaries if they ask for them, give them reasonable information about the investment and management of the trust fund and inform a beneficiary when they become entitled under the trust.
Information requests from beneficiaries
Conversely, the beneficiaries are entitled to request information to reassure them that the trust is being properly administered. However, the beneficiaries’ entitlement to information from the trustees is not unfettered and trustees do not have to comply with every request for details and information of the beneficiaries. They must have genuine reasons for seeking disclosure of information, such as holding the trustees to account or to protect their own beneficial interests.
In a recent case, Lewis and others v Tamplin, the beneficiaries made numerous requests to the trustees for information about the trust as they believed that distributions of trust money had been made to other beneficiaries but not to them.
The trustees refused to respond on the basis that the beneficiaries had enough information. However, the court decided that the beneficiaries had the right to disclosure as they wanted the information to hold the trustees to account – and that was a valid reason.
While the court said that the beneficiaries were entitled to disclosure of documents relating to advice sought by the trustees in relation to the trust itself and for the benefit of the trust and the beneficiaries, they were not entitled to see documents that were protected by legal professional privilege of the trustees in any other capacity. Nor can beneficiaries require the trustees to disclose information or documents to hold them account specifically for their management decisions.
Beneficiaries do not have the right to see everything, so how should you respond to a request from a beneficiary for additional information? You should consider, for example, whether they have valid reasons to see the information, if it is reasonable to supply the information requested and whether it is privileged so that they do not have the right to see it.
When information is not provided
The law allows beneficiaries to ask the court to uphold their rights by making the trustees accountable. This means if you refuse a request for information from beneficiaries, they may ask the court to order disclosure of the information. The court will not simply accept an argument that the beneficiaries already have enough information, there must be good reason in law why disclosure should be refused.
As a trustee, you need to consider requests for information and documents from beneficiaries carefully. If you are inclined to refuse a request it must be for a proper reason, otherwise there is a risk of a legal dispute.
For further information, please contact Deborah Adams, Director of Private Client Services on 01566 772375 or email email@example.com
This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.
Trustees’ duty to give information to beneficiaries
Five problems with a leasehold property
Taking your first commercial lease
Is your organisation protected from employee social media legal risk?
Have you been targeted by negative social media posts?
Farmers be alert when being inspected
Help for House Sellers?
Don’t let your digital assets end up in a digital grave
Valuing an estate for probate
Development proposals and your local authority search
What can you do if your child is injured in a serious accident
NetRights welcomes new protection for social media users
SHOULD I GET A LAWYER FOR A SPEEDING OFFENCE?
Supreme Court recognises that social media is a “casual medium” in libel battle
Choosing the best conveyancer who is right for you
Making a will after a second or subsequent marriage
Option or promotion agreement – which is best for landowners?
Anonymous pub and restaurant online reviews leave a bad taste
Have you had an accident involving a horse?
Help to Buy – beware of some cracks in the structure
Understanding Lasting Powers of Attorney
Changes to Energy Performance Certificate for Landlords
Had a cycling accident? Your route to obtaining compensation
New year, new home: tips to sell your home in the New Year
Tax Planning for your inheritance
Hearing loss: when your employer may be liable
Buying a home for your retirement, five things you need to consider
Farmers plan to diversify after Brexit
Ministers press ahead with probate fee shake-up - reports BBC News
Botched dental treatment? You may be entitled to compensation
Why a Health and Welfare Power of Attorney is a good idea
Will the new charge on building developments in Cornwall affect you?
Energy Performance Certificates – Do They Matter?
HMRC Challenging Stamp Duty Land Tax Payments
Ben Mitchell qualifies as a solicitor
The potential implications of Brexit on employment law
Appointing a guardian for your children
Houses in multiple occupation – new rules from October 2018
New Agriculture Bill published
Will Brexit affect my pension?
Dreaming of a holiday home? Sort out the legals before putting your feet up
Lasting Power of Attorney by Deborah Adams
Settled status after Brexit by Alexis Hager
How to choose an executor to administer your estate when you die
How overage agreements can boost profits from your land
Top tips for first-time buyers
How Could Brexit Affect My Farm?
Wills & Succession in Spain by Deborah Adams
Brexit – an international and local view by Alexis Hager, Litigation
Capital gains tax - important facts for non-residents of the UK
Buying a home: the importance of making sure the seller is entitled to sell
Changing a will after someone has died: it is possible and it could save you money
Your responsibilities when you have people working in your home
Sad passing of Battle of Britain pilot who served with Parnall family member
Considerations when buying a heritage property
Disciplinary proceedings at work: guide for employers
Employers should have a disciplinary process in place, but just following this may not be enough to avoid falling foul of the law and exposing yourself to the risk of an employment tribunal claim.