Email to a friend Print this page

Disclosure of Trust Information

Trustees are routinely asked to disclose documentation and/or information in respect of trusts which they administer. In the majority of circumstances a beneficiary will make a straightforward request (for example for a copy of the trust deed or accounts) which the trustees will be willing to comply with. However, there are occasions when the trustees will consider one or more of the following questions:

Do I have to disclose information to a potential beneficiary of the trust?

It is widely acknowledged that in order for trustees to be accountable for their administration of a trust, beneficiaries must be entitled to obtain and to consider copies of trust information. With this in mind case law has considered the definition of a beneficiary and has widely interpreted it to include not only persons with fixed interests, but also potential beneficiaries under a discretionary trust and potential beneficiaries under a discretionary power (Schmidt v Rosewood [2003]- Isle of Man case referred to the Privy Council).

Accountability therefore is not just a matter of whether the beneficiary has a fixed or discretionary interest in the trust property, but whether the court will, after allowing for the particular circumstances of the case, consider that the party seeking disclosure is sufficiently likely to benefit from the trust in the future. If so, then in order to ensure accountability, the court will be willing to exercise its powers of supervision and intervention and make an order for disclosure.

Am I always right to refuse a request from a non-beneficiary?

Although it would appear safe to assume that only beneficiaries, or potential beneficiaries, should be entitled to request documentation and/or information relating to a trust this assumption has been challenged by various cases brought before the court and by consideration of the wording of Jersey statute.

An example of a successful application for disclosure by a person who was not a beneficiary, at the time of the request, is the Guernsey case of Bathurst v Carey Olsen[2004]. Here the applicant had been notified by the trustees that she had been excluded as a beneficiary but was not informed of any subsequent steps taken by them. Although no longer a beneficiary she applied to the court and extensive orders for disclosure were made, which included both information for the time she was a beneficiary and also for a short period following her exclusion. The test the Court relied upon in this case was not statute based but simply whether or not it was appropriate in the circumstances for the court under its inherent jurisdiction to intervene and exercise its discretion and order the disclosure by trustees of trust information.

Turning to Jersey law, Article 29 of the Trusts (Jersey) Law 1984 (as amended) states:

“Subject to the terms of the trust and subject to any order of the court, a trustee shall not be required to disclose to any person, any document which -………

(d) relates to or forms part of the accounts of the trust,

unless, in a case to which sub-paragraph (d) applies, that person is a beneficiary under the trust not being a charity, or a charity which is referred to by name in the terms of the trust as a beneficiary under the trust or the enforcer in relation to any non-charitable purposes of the trust.”

Despite the rather negative introduction to the Article, a trustee may be required, under the terms of an order by the court, to disclose trust information to any person. This makes it clear that disclosure to persons other than beneficiaries was contemplated by the statute draftsmen.

By way of example, although neither the settlor nor the protector is expressly referred to in Article 29, on this interpretation it is possible to conceive that there may be occasions when he/she may be entitled to request copies of trust information (of course this assumes that the settlor is neither a trustee nor a beneficiary) and the court would, upon considering the particular circumstances of the case, be willing to exercise its power and make an order for disclosure.

Which trust information must I disclose?

Subject to the discretion of the court to refuse disclosure, there is a strong presumption in favour of a beneficiary having access to the following:

The trust instrument and any supplementary documents;
Trust accounts (which include the accounts of any underlying companies or entities owned by the trust (see re Lombardo Settlement [1990]) (please refer to a separate article which considers the relationship between the trustee and the underlying company);
Information concerning how trust property has been invested; and
A full inventory of trust property with details of their location and any valuations.

However, although a beneficiary is generally entitled to inspect the above, the English case of Re Londonderry’s Settlement [1965] acknowledged that this right did not extend to:

a) Documents bearing on the deliberations of the trustees leading to their decisions (taken in good faith) as to the exercise of discretionary powers, for those were decisions taken in a confidential role and the trustees were not bound to disclose their motives and reasons; and

b) Communications between individual trustees and appointors, or between any of the trustees and an individual beneficiary, for those were not trust documents.

Such exceptions are reflected in the wording of Article 29 (a), (b) and (c) which in short create a strong presumption against the disclosure of documents such as trustees’ deliberations and the settlor’s letter of wishes, but subject to the court’s discretion to order disclosure in exceptional circumstances.

It is worth noting here that the definition of “trust document” or “trust information” is rather fluid and will be very much dictated by the individual circumstances of the case. Although a list of trust documents is provided above, essentially any trust document or information is potentially disclosable in accordance with an order of the court since the paramount considerations for the court are trustee accountability and the best interests of the beneficiaries.

Under what circumstances should I refuse to disclose trust information?

Accountability is not the key issue, however, if the trustees consider that the beneficiary is seeking disclosure of the information for a purpose which is contrary to the best interests of the beneficiaries, for example, in order to attack the validity of the trust, as in the matter of the L and M Trusts [2003]. This case clearly illustrated that there is a judicial discretion to refuse disclosure and disclosure is not an unqualified right.

It is the trustees responsibility to protect the other beneficiaries by withholding trust information where they are satisfied that it would not be in the best interests of the beneficiaries as a whole not to disclose (re Rabaiotti 1989 Settlement [2000]. For this reason trustees should always consider why the disclosure has been requested.

However, trustees should note that the rules are different if a beneficiary seeks discovery of trust documents in the course of trust proceedings. If the validity of the trustees’ actions is challenged, or if mala fides is alleged, then the court may order that the trustees must make full discovery of all relevant documents to the action which are in their possession or power including those setting out the basis for the exercise of any discretion (Stacho v Barclays Private Bank & Trust Ltd[1998]).

What about Letters of Wishes?

Although a Letter of Wishes is not legally binding on the trustees, it is a highly important document since in many instances it will guide their deliberations. As the Letter of Wishes is by its very nature confidential, it is understandable that trustees will be reluctant to release a copy and will seek to rely on Article 29 (a) to (c) to justify their refusal to disclose, and in most cases this will be appropriate. However, trustees should be aware that the Royal Court is not afraid to exercise its discretion and order disclosure to avoid injustice (and did so for that reason in the case of re Rabaiotti). In the Jersey case of First Island Trustees Limited and the Avalon Trust [2006], another matter resulting from divorce proceedings in England, the Court ruled that there was good reason to order disclosure of the letter of wishes for there was a real risk that the English Court would draw or make assumptions which would in fact be incorrect. Here the wife of the husband beneficiary possessed a copy of an earlier draft of the letter of wishes and therefore it was considered undesirable that the English Court should be invited to proceed on the basis of a document which was not the final version.

Again, trustees must also be minded to ensure that a beneficiary is not merely seeking disclosure as a form of pre-action discovery with which to attack the trust.

Have I considered all the relevant factors before I disclose?

As highlighted above trustees must seek to balance the requirements of accountability against the needs for confidentiality and the best interests of the beneficiaries as a whole.Therefore before trustees comply with any request for disclosure of trust information there are a set of questions which must first be satisfactorily answered, namely:

Am I satisfied that I know who is making the request for trust information? Is this individual a current beneficiary or likely to be one in the future? Where appropriate, have I been provided with the necessary identification documentation?
The request is being made by an advisor - do they have the requisite authority to do so and have they provided me with a copy of the letter of authority?
Exactly which information or documentation is being requested from me?
If I satisfy the request will I be disclosing information which reveals the trustees’ deliberations or reasons for the exercise of a power or discretion?
Why is the trust information required, and why now?
Do I consider that the request is being made by a potentially litigious individual?
If I release the requested information will there be any adverse consequences for the trust and/or the remaining beneficiaries?

If you are a trustee and have any difficulty answering any of the above questions, or have any doubts generally in respect of disclosure, then you should seek legal professional advice.

Should you have any queries and wish to have a confidential conversation with regard to any concern then please do not hesitate to call or email.

Advocate Richard Pirie – 01534 601755 Email
David Dorgan – 01534 601757 Email
Carl O’Shea - 01534 601750 Email

THIS ARTICLE IS FOR INFORMATION PURPOSES ONLY AND NOT BY WAY OF LEGAL ADVICE. PROFESSIONAL LEGAL ADVICE SHOULD BE SOUGHT BEFORE ANY ACTION IS TAKEN.