A new Trusts Bill has recently been released for public consultation. This bill updates and changes various aspects of trust law. One interesting proposed change is the rights beneficiaries have to trust information. The most recent judicial case involving beneficiaries and trust information is Erceg v Erceg  NZSC 28. The Supreme Court did not find that there was a presumption for or against disclosure of trust documents, but that there is an "expectation that basic trust information will be disclosed to a close beneficiary who wants it". The Supreme Court's analysis did differ from the lower Courts. The Supreme Court listed certain factors to take into consideration when courts receive a request for disclosure. They are:
- the documents that are sought (eg the trust deed as opposed to trustee minutes or financial information);
- the context for the request and the objective of the beneficiary in making the request;
- the nature of the interests held by the beneficiary;
- whether there are issues of personal or commercial confidentiality;
- whether there is any practical difficulty in providing the information;
- whether the documents sought disclose the trustee's reasons for decisions made by the trustees;
- the likely impact on the trustee and other beneficiaries if disclosure is made;
- the likely impact on the settlor and third parties if disclosure is made;
- whether disclosure can be made while still protecting confidentiality;
- whether safeguards can be imposed on the use of the trust documentation.
The Supreme Court refused to order disclosure of the trust documents, partly based on the applicant's litigious nature and likelihood of harassing other beneficiaries, as well as other factors.
The draft Trusts Bill has gone the "other way" when it comes to giving trust information to beneficiaries. Under the proposed bill, a trustee has a positive duty to make available to a sufficient number of beneficiaries sufficient trust information to enable the terms of the trust be enforced against the trustees. This can include a list of the assets and liabilities, accounting records and financial statements. There is also a presumption that the trustee must notify "qualifying beneficiaries" (a beneficiary who has a reasonable likelihood of receiving trust property) or their representative of basic trust information, which includes the fact that they are a beneficiary, the name and contact details of a trustee, the occurrence of and the details of each appointment/removal/retirement of a trustee, and the right of the beneficiary to request a copy of the terms of the trust or trust information. There is also a presumption that the trustee must, within a reasonable period of time, give the beneficiary the trust information that the beneficiary has requested.
There are factors which can be weighed against this presumption which would allow for non-disclosure. They are:
- the nature of the interest in the trust held by the beneficiary and the other beneficiaries of the trust;
- the degree and extent of the beneficiary's interest in the trust and likelihood of them receiving trust property in the future;
- whether the information is subject to personal or commercial confidentiality;
- the expectation and intentions of the settlor at the time of the creation of the trust, the age and other circumstances of the beneficiary;
- the age and circumstances of other beneficiaries;
- the effect given the information on the trustees, other beneficiaries of the trust and third parties;
- in the case of family trusts, the effect of giving the information on relationships within the family;
- if the trust has a large number of beneficiaries or ascertainable beneficiaries, the practicality of giving information to all beneficiaries or all members of a class of beneficiaries;
- the practicality of imposing restrictions and other safeguards on uses of information;
- the practicality of giving some or all of the information to the beneficiaries in redacted form; or
- if a beneficiary has requested information, the nature and context of the request.
If these new provisions are made law, the landscape of beneficiaries and trust information will be radically changed. There will be a presumption to give trust information to the beneficiaries and it may be that the burden of proof to not give disclosure will be on the trustees.
Are you concerned about the proposed new Trusts Bill, including its new disclosure provisions? Concerned about creating a trust or just want a trust check-up? If you have any thoughts and concerns about trusts, feel free to contact at our Auckland Office: