By Andrew Steele - 8 Sep 2017
While the 'parent settlors' of a family trust are alive
and have their mental capacity, the issue of monitoring what the
trust is doing is not an issue. But once the parents die or lose
capacity and the administration of the trust transfers to the
'professional trustees', it often becomes the task of the children
to ensure that the trustees act reasonably, competently and are
held to account for their decisions. But how?
If 'sunlight is the best disinfectant' then seeing what trustees
are supposed to be doing and comparing that with what they
are doing is the best, if not only, way to police
trustees.
Fortunately, the Supreme Court recently outlined the rules and
principles about what trustees ought to disclose to trust
beneficiaries. The Court saw the starting point as being the
obligation of a trustee to administer the trust in accordance with
the trust deed and the duty to account to beneficiaries. A
beneficiary who seeks such an account may seek access to
documentation necessary to assess whether the trustee has acted in
accordance with the trust deed.
While trustees have a discretion as to what they disclose, they
must exercise that discretion in a principled way. This effectively
means that they would almost invariably be obliged to supply the
trust deed and the trust's financial statements if a beneficiary
requests them. They may also be required to hand over minutes and
resolutions, although details of distributions and names of other
beneficiaries may be deleted for reasons of privacy. On the other
hand, it is unlikely they would have to hand over the settlor's
memorandum of wishes or the reasons for making any
distribution.
If you would like to know more about your rights or obligations,
then contact any one of our specialist trusts and estate
litigation team who will be happy to assist and advise.