News | December 4, 2017

Transparency and Trusts

A common issue encountered when dealing with trusts is establishing what information or documents a beneficiary who has an interest in a trust is entitled to see.

Under general trust law principles, trustees have a duty to inform a beneficiary of the existence and terms of the trust and of the general nature of their interest. The duty may extend to discretionary beneficiaries who have a reasonable prospect of benefitting in the future.

Beneficiaries do not have an absolute entitlement to the disclosure of trustees’ deliberations regarding the exercise of their discretions. Nonetheless, trustees should consider such requests in light of all of the circumstances, including the beneficiary’s reasons for wanting the information, the prospect of the beneficiary benefitting in future, whether the information attracts “legal professional privilege” (as certain confidential communications between a lawyer and client will), and what would be in the best interests of the beneficiaries as a whole. If there is a good reason to refuse the request (for example, because the beneficiary is looking to use the information to challenge the trust), then the trustees are permitted to do so.

In cases where the matter cannot be resolved amicably, dissatisfied beneficiaries can consider making an application to court to obtain the information but should always take advice. They could be ordered to pay the costs of the application if the court decides that the trustees were right to withhold the information.

The Dawson-Damer v Taylor Wessing case this year highlighted that beneficiaries can obtain trust information under the Data Protection Act 1998 ( “DPA”) if they are not able to obtain this from trustees under trust law principles. Beneficiaries can make a “subject access request” (“SAR”) under the DPA for information that the trustees hold that represents their “personal data”. However, the trustees may be exempted from complying in certain circumstances, such as if that information attracts “legal professional privilege” for the purposes of English law.

It is in the best interests of the trustees to be as co-operative as possible when dealing with information requests. They should act reasonably and justify their decision, so as to avoid the potential for conflict. Beneficiaries, in turn, should be clear on what they may and may not be entitled to before making a request or disputing a decision, taking advice as necessary.