Understanding Beneficiary Rights: Requesting Trust Information in New Zealand

In the past, it has often been the case that only the trustees knew about the family trust “secrets”. The new Trusts Act 2019 (the Act) dramatically shifted this position.

The purpose of the new rules is to ensure that beneficiaries have sufficient information to enable the terms of the trust and the trustees’ duties to be enforced against the trustees. There are two elements to how this objective is satisfied in the Act:

• disclosure of basic trust information to all beneficiaries; and
• responding to a request from a beneficiary for further trust information.

The shift in the presumption of disclosure of trust information has a twofold impact on trustees and settlors:

•  Trustees have the onus to ensure they understand what their obligations are and how to handle requests appropriately.
• Settlors need to consider whether there are concerns in disclosing trust information, especially in sensitive family situations and provide guidance to trustees through letters or memorandums of wishes.

This article clarifies how beneficiaries can request trust information in New Zealand. (If you are interested in information regarding settlor considerations, check out our blog).

Basic Trust Information
The Act establishes a presumption that a trustee must make available to every beneficiary (or representative of a beneficiary where necessary) the following basic trust information:

• the fact that a person is a beneficiary of the trust; and
• the name and contact details of the trustees; and
• the occurrence of, and details of, each appointment, removal and retirement of a trustee as it 
  occurs; and
• the right of the beneficiary to request a copy of the terms of the trust or trust information.

The obligation to make this information available is an ongoing one. Trustees are required to consider at reasonable intervals whether they should be making the information available. This is one aspect of the duty set out in the Act to consider actively and regularly whether to exercise one or more powers. (If you are interested in information regarding trustee duties, check out our article).

Request for Further Trust Information
Beyond basic trust information, beneficiaries can request further information about the trust, such as financial statements or documents related to recent distributions.
The Act sets the obligation that trustees must provide the requested information within a reasonable timeframe, unless they have a valid reason to withhold it.

At any point when trustees are considering disclosing information (be it basic trust information or further requested information trustees must take into account factors detailed in the Act and may decide to withhold some or all of the basic trust information or requested information from one or more beneficiaries.

If trustees make a decision to withhold information to a beneficiary, they need to ensure sufficient records of their discussions and decisions are kept. Just in case trustees decisions are subsequently challenged.

On what grounds can a trustee refuse to disclose trust information to a beneficiary?
When deciding to disclose trust information trustee must weigh various factors, keeping in mind the presumption of disclosure. These factors include:

• the nature of the beneficiary’s interest in the trust including the likelihood of the beneficiary receiving a benefit;
• whether the information is subject to personal or commercial confidentiality;
• the expectations and intentions of the settlor at the time the trust was created;
• the age and circumstances of the beneficiary and other beneficiaries of the trust;
• the effect of disclosure on the beneficiary, on the trustees, and on third parties;
• the effect of disclosure on family relationships, and relationships between the trustees and some or all of the beneficiaries to the detriment of the beneficiaries as a whole;
• in a trust that has a large number of beneficiaries or unascertainable beneficiaries, the practicality of giving information to all beneficiaries or all members of a class of beneficiaries;
• the practicality of imposing restrictions or safeguards on the use of the information or subject to redaction;
• any other factor that the trustee reasonably considers is relevant to determining whether the presumption applies.

If the circumstance arises where no beneficiary of a trust has any information about that trust, trustees may need to involve the Court to ascertain alternative means by which the trustees can be accountable and the trust can be enforced.

Conclusion
Settlors and trustees must understand these disclosure obligations, especially in situations involving family dynamics that might complicate trust management. Trustees are required to regularly assess whether basic trust information should be shared, making this an ongoing responsibility that demands careful consideration.

For beneficiaries, knowing your rights and how the trust is managed is essential for ensuring the trust serves its purpose and that trustees remain accountable. Get in touch with the experienced Elevated Trusts Team today.

Note that these disclosure obligations do not apply to charitable trusts or other trusts without beneficiaries.