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What can a trustee disclose to a beneficiary?

Some may think everything, some beneficiaries struggle with the concept that they are not the owners of the assets in a trust.

Therefore, the blessing provided by the Royal Court of Jersey to a decision by the trustee of the Y Trust to refuse disclosure of information concerning the trust was interesting. A former beneficiary of the trust sought documents from the trustee and on the facts, the case seemed straightforward: documents were not being sought in order for the former beneficiary to hold the trustee to account, but to support proceedings which might have involved an attack on the Trust assets. The trustee refused disclosure on the basis it was not in the interests of the beneficiaries as a whole, and sought Court approval which was forthcoming.

At a recent industry briefing breakfast hosted by Affinity Private Wealth, Edward Mackereth, a partner at Ogier, spoke about this case and the general rights of beneficiaries to information from trustees. One of the more interesting points of this case was the role of the Royal Court. The judgement bought into question whether the Court should offer discretion over decisions or consider the discretionary decisions made by a trustee. This slight difference, whilst possibly small, could lead to judgements being made very differently by the Royal Court in the future should they ever have discretionary jurisdiction. Trustees decisions would need to have regards for how others could have made them rather than considering the reasonableness of an action at a point in time.

The trustees role can often be difficult and this case highlights that knowing your clients well can differentiate the capabilities of a good trustee. It further highlights that in future trustees may need to consider judgement on a decision by the court could be different to theirs. This could develop the way trustee make decisions from the current basis of the facts before them to thinking about how others, including a court, would have acted.

The practical application of this is for trustees is to spend a greater amount of time understanding their role within the wider lives of the beneficiaries and ensure their decisions factor in future outcomes.