It has often been considered that the role of trustee of a trust is an onerous one, with trustees exposed to liability claims by beneficiaries if financial decisions don’t work out.

This has led to increasing reluctance by professionals to offer themselves up as trustees, and as a consequence, the governance of trusts has deteriorated.

The situation is set to worsen with the introduction of the new trustees’ act, which comes into force in January 2021.

Trustees should now be considering the requirements of the new rules to ensure they can meet new obligations under the changes.

The legislative changes are aimed at ensuring that trust administration is more transparent for beneficiaries. The cloak of secrecy that often surrounds trusts is set to be ripped off.

In some cases, we are already seeing trustees looking to exit their roles and for some, the windup of trusts is being seriously contemplated.

Trustees now have an obligation to hold core trust documents and to provide all beneficiaries with basic trust information.

This includes, the fact that the person is a beneficiary of the trust, name and contact details of the trustees, details of any retirements and reappointments of trustees, and beneficiaries must be advised that they have the right to be shown a copy of the terms of the trust and key information like the trust’s financial statements.

‘The cloak of secrecy that often surrounds trusts is set to be ripped off’

When deciding to release information requested by a beneficiary trustees will need to be mindful of:
• The likelihood of the beneficiary receiving trust assets in the future
• Is the information personally or commercially confidential?
• Whether the settlor intended the beneficiaries to be given this information when the trust was established
• The age and circumstance of the beneficiaries
• What impacts the information may have on beneficiaries
• What impacts will there be on the trustees and other affected parties
• Will family relationships be impacted?

In meeting a request for financial information trustees may well be concerned that they will come under pressure to make distributions by the beneficiaries.

The Act also makes other changes, including the ability to use an alternative resolution service to the courts to settle trust issues.

Worryingly for trustees, they can also now be held personally liable for gross negligence under the act andthis is not something they can contract out of.

The maximum life span of a trust is currently 80 years. The new act will lengthen this to 125 years. Right now, trustees should be working to ensure they have all the core Trust information they may be required to provide. They should also be reviewing beneficiary lists and the arrangements within the trust.

So now is the time to review, take stock and think carefully about what the impacts of the new rules will be for your own particular trust and its cluster
of beneficiaries. Acknowledgement: This article was compiled with assistance from Monique Mackie of Alexander Dorrington Solicitors.