If you operate a Trust, you should be aware of the significant Trusts Act 2019 changes coming into force. Do you know how these affect your trustee duties? Do you know if your financial records are up to date to meet the disclosure requirements now in play? Are you aware of the new risks that you could be subject to for non-compliance?
Below is an article from Kirsten Maclean at Sidekick Legal that outlines the important things you need to know now regarding the recent changes to Trusts:
While trustees have always had obligations of monitoring, minuting and reporting on trustee meetings/decisions and other relevant factors, the law has tightened these obligations up and made it easier for beneficiaries to access information. The law has also limited the grounds for refusing to provide beneficiaries information. It is no longer sufficient to say “I don’t want my children (beneficiaries) to know what the assets of the trust are. Trustees need to move clearly away from the view that they personally still “own” the assets and accept that the assets held by the trustees of the trust for the benefit of all the beneficiaries. The courts will take a more stringent view moving forward on these obligations, duties and responsibilities. Never has it been more important to review your trust, ensure that your reporting and recording obligations are being complied with, and also to consider whether or not the appointment of an independent trustee or trustee company is the right move, so that they can ensure the trustees will meet their obligations and the nature and purpose of the trust will withstand scrutiny from the court.
Some of the key changes impacting on a lot of beneficiaries will be the requirement to provide disclosure to beneficiaries who request information. It is important to note the following:
Basic trust information which must be provided to beneficiaries includes:
- that the beneficiary is a beneficiary of the trust
- details of each trustee
- the beneficiary’s right to request additional trust information.
The additional information they can request includes (but is not limited to)
- a copy of the trust deed and any variations to the trust deed
- records of trust property (identifying the assets, liabilities, income and expenditure) including accounting and financial statements
- records of trustee decisions and minutes of meetings
- any written contracts entered into eg agreements for sale and purchase, loan agreements
- any other relevant trust documents.
After considering certain factors the trustees may be entitled to withhold certain information from beneficiaries but we urge you to get legal advice before deciding to withhold information as many of these factors require a subjective interpretation. Those factors which may result in withholding information may include (but not be limited to):
- whether information is subject to personal or commercial confidentiality
- the expectations and intentions of the settlor at the time of the creation of the trust (if known) as to whether a beneficiary would be given information
- the age and circumstances of the beneficiary and the age and circumstances of other beneficiaries
- the effect on the beneficiaries, the trustees, other beneficiaries, and third parties of giving the information
- the effect on family relationships, and on the relationship between the trustees and beneficiaries, of giving the information
- beneficiaries, the practicality of giving information to all beneficiaries
If you’re unsure on any of these make sure you’re talking to your lawyers who can give you clear advice on your obligations and duties moving forward, or feel free to get in touch with Kirsten Maclean from Sidekick Legal if you have any questions.