Beneficiaries do not have an automatic right to see all trust documents, but trustees usually cannot give a blanket refusal to a beneficiary information request.

Under the Trusts Act 2019, beneficiaries are entitled to enough information to understand the trust and, where necessary, hold trustees to account. Trustees must balance their disclosure obligation against confidentiality obligations, privilege and the interests of other beneficiaries.

The presumption of disclosure

The Act creates a presumption that trustees will give beneficiaries basic information, including:

• that they are a beneficiary;
• the trustees’ names and contact details;
• details of trustee appointments, retirements and removals; and
• that they have a right to ask for the trust deed or other trust information.

There is also a presumption that trustees will provide any other trust information, if requested by a beneficiary, within a reasonable time. “Trust information” includes any information about the terms of the trust, its administration and its assets, if the information is reasonably necessary for the beneficiary to be able to enforce the trust. "Trust information" does not include the reasons for trustees' decisions.

This does not mean a beneficiary can demand every file held by the trustees. The rationale for beneficiaries' disclosure rights is trustee accountability: giving beneficiaries sufficient information to check that the trust is being administered properly.

What documents will usually be appropriate to provide?

Every trust is different, but a beneficiary will often have a strong case for receiving:

• the trust deed and later deeds changing its terms;
• documents recording who the trustees are;
• trust financial statements and accounts; and
• documents showing what has happened to trust property.

Those documents are often the minimum needed to enable a beneficiary to scrutinise the trustees’ administration of the trust.

What may be withheld?

Trustees are usually not required to provide their reasons for making a discretionary decision. That may include trustees' deliberations about whether to make a distribution, and why one beneficiary was preferred over another. The fact of the distribution usually would need to be disclosed, but trustees will not usually be required to disclose documents recording their confidential discussions or reasons for exercising a discretion in a particular way.

More generally, the presumption of disclosure of trust information can be displaced if the trustees consider that, based on a prescribed list of factors, the information should not be given to the beneficiary. The exhaustive list of factors is set out in the Act and includes:

• the requesting beneficiary’s interest in the trust and likelihood of receiving trust property;
• whether the information is subject to personal or commercial confidentiality;
• the settlor’s intentions about disclosure;
• the effect on the beneficiaries, trustees and third parties;
• the likely effect on family relationships; and
• whether redactions, a confidentiality undertaking, or limited inspection could protect the sensitive information.

For example, trustees may refuse to disclose information to one beneficiary if they consider disclosure may harm family relationships or the trust's wider interests. The settlor may have foreshadowed this and recorded their intention that documents not be disclosed to a beneficiary, in a letter of guidance to the trustees.  

For trustees of trading trusts, the commercial confidentiality factor may be relevant.  

A trustee should not simply refuse a request because family relationships are strained or because the information may prompt further questions. Equally, trustees should not send the beneficiary the entire trust file without reviewing it first. The appropriate response is usually to consider each category of the request separately. Sometimes confidentiality concerns can be addressed by redacting parts of a document or placing limits on how it is to be disclosed.

Does legal advice have to be disclosed?

Legal professional privilege protects confidential communications between solicitor and client made for the dominant purpose of obtaining or giving legal advice. That privilege can extend to advice as to what the trustees should prudently do in a relevant legal context.

Legal professional privilege is important, but it does not always allow trustees to refuse disclosure to a beneficiary. The Supreme Court has held that legal advice obtained for the general administration of the trust may have to be disclosed to a beneficiary. This can include advice paid for from trust funds about how the trustees should perform their duties.

The position is different once the trustee and beneficiary have become genuinely adverse. Legal advice obtained to defend actual litigation brought by a beneficiary will generally remain privileged. The same may be true before proceedings begin if the advice was obtained mainly to resist a beneficiary’s claim rather than to obtain guidance on the proper administration of the trust.  

The key questions for trustees as to whether privilege can prevent disclosure are:

• why the advice was obtained;
• whether it concerned the administration of the trust or the trustees personally;
• who paid for the advice;
• whether the interests of the trustees and beneficiary were aligned at the time; and
• whether litigation was underway or reasonably anticipated.

Practical steps for trustees

When a beneficiary asks for information, trustees should:

1. Acknowledge the request promptly.
2. Identify exactly what has been requested and why it may be needed.
3. Review each category of the request separately.
4. Consider the Trusts Act factors.
5. Separate trust administration advice from advice about a personal or hostile dispute.
6. Provide what can properly be provided, rather than refusing the whole request because part is sensitive.
7. Consider safeguards such as redactions, a confidentiality undertaking, or disclosure to the beneficiary’s lawyer or accountant only.
8. Take advice early if the request concerns contentious issues, confidential third-party information or privileged communications.

The practical takeaway

Good trust administration requires an appropriate level of transparency. Trustees do not have to disclose every document, but they should usually provide sufficient information for beneficiaries to understand the trust and assess whether it is being properly administered.

For settlors, if there are concerns about information disclosure to beneficiaries, it may be wise to record your disclosure intentions in a letter of guidance to the trustees.

For those requesting disclosure, the request is likely to be more successful where it is linked to understanding the beneficiary's rights under the trust or the trustees’ administration of the trust.

For trustees responding to those requests, a blanket refusal is vulnerable to a challenge. Trustees should assess the request carefully, disclose what is appropriate, and protect confidential information where necessary. Most importantly, trustees should obtain advice before an information request turns into a costly trust dispute.

This article provides general information only. The appropriate response to a request for trust information will depend on the trust deed, the nature of the beneficiary’s interest, the documents sought and the wider circumstances of the trust.