The Trusts Act 2019 (Trusts Act) came into force in New Zealand in 2021 and introduced explicit obligations for trustees to disclose information to beneficiaries. Some Trusts have embraced disclosure as a necessary part of modern trust administration, while others continue to grapple with its implications, particularly where the existence of the Trust and the extent of its wealth has been kept from younger generations of a family.

The disclosure provisions were intended to ensure transparency and accountability in the administration of trusts and aims to provide beneficiaries with sufficient information to enforce the terms of the trust and hold trustees accountable.

To that end, there is a presumption that trustees must notify all beneficiaries of the “basic trust information”, being:

1. The fact that a person is a beneficiary.
2. Names and contact details of the trustees.
3. Details of trustee appointments or removals as they happen.
4. The beneficiary’s right to request a copy of the trust terms or other trust information.

The presumption is not absolute and can be rebutted. However, trustees must consider all the mandatory factors in section 53 of the Trusts Act before deciding to withhold information or refuse a request for information. That section directs Trustees to “reasonably consider” that information should not be available. Reasonableness is an objective test – it is not simply a licence to trustees not to disclose because they don’t want to!

There have been an increasing number of High Court applications regarding disclosure requests.

The Court has outlined that, when reviewing a trustee’s decision to refuse a disclosure request, the Court’s role is supervisory. The Court will intervene if the trustee has acted outside their powers, considered irrelevant factors, failed to consider relevant ones, acted in bad faith, or made a perverse or irrational decision.

The Court continues to emphasise that the purpose of these provisions is to promote accountability of trustees to beneficiaries, and we expect that trend to only increase with time. Therefore, it is vital that trustees “face up” to the realities of disclosure in order to avoid the more problematic situation of being in breach of their duties and the even more dire consequence of being removed as a trustee.

One recurring issue is uncertainty as to who are the beneficiaries of a trust!

It is surprising how many trustees do not know with certainty who all the beneficiaries of the Trust are:

• In some newer trust deeds, it may just be the settlors and their children.
• Older trust deeds can sometimes include the settlors’ parents or siblings or other wider family members.
• Some trust deeds extend this to all the settlors blood relatives or their children’s partners.

So, what should you do as a trustee right now? First, check your trust deed and be certain as to who the beneficiaries of the trust are. Then, if you have not done so already, the trustees should address their obligation to disclose the basic trust information to all adult beneficiaries.

If you need any advice on trust disclosure or if you find the trust’s beneficiaries are not who you expected, then Mortlock McCormack Law can assist. Please contact Andrew Logan, Principal ([email protected]/021 222 4646) Jamie Stanton, Senior Associate ([email protected]/03 343 8588) or any member of our trust law team.