Beneficiary Rights and Trustee Obligations
The Trusts Act 2019 comes into force on 30 January 2021. The Act increases the rights of beneficiaries and protects their interests while putting clearer obligations on trustees. If you are a trustee of a trust, it is important you know these changes and make sure you comply with the Trusts Act 2019.
The Act requires trustees to provide beneficiaries with the following information as a minimum:
- the fact that a person is a beneficiary of the trust;
- the name and contact details of the trustee(s);
- changes in the trusteeship, i.e. when a new trustee is appointed, or a trustee is removed or retires; and
- the fact that a beneficiary may request a copy of the terms of the trust, or certain types of other trust information.
Beneficiaries can request further information but it is up to the trustees whether they will provide this. The Act does create some guidance for trustees on this point, listing some potential factors to take into account such as:
- the nature and interest of the beneficiary making the request;
- the nature and interests of other beneficiaries;
- the intention of the settlor when they established the trust;
- the age and circumstances of the beneficiary making the request; and
- what the effect will be by giving the beneficiary the desired information.
So what does this mean for trustees?
The Act says trustees must be more diligent in their roles as trustees when providing information to beneficiaries, so it can be challenging for a trustee to determine what information to provide and what to withhold. There may be information the trustees do not want to disclose for good reasons. If they cannot decide or need assistance, trustees can apply to the courts for directions.
What should trustees do now?
Before the Trusts Act comes into effect on 30 January 2021, trustees should:
- Ensure they hold a copy of the trust deed;
- Ensure at least one trustee holds records of the trust property, all decisions made by the trustees, all documents recording the removal and appointment of trustees, any memoranda of wishes, copies of contracts and any accounts, and any other documents necessary to administer the trust;
- Review the terms of the trust to ensure that the trustee’s duties contained therein are in line with the ‘mandatory’ and ‘default’ duties imposed by the Trusts Act;
- Consider removing any beneficiaries where it is not intended that they will benefit from the trust; and
- Consider whether and when to make disclosure to beneficiaries.
If you are a trustee or beneficiary of a trust please contact us to discuss the full extent of your role or rights under the Trust Act 2019.
Contact Brett Kilbride if you have any further queries on 03 327 8159.