Trust disputes

Trustees have a common law duty of care and, in some aspects of their role, a duty that is required by legislation (a statutory duty of care). A trustee owes fiduciary duties to the beneficiaries to act with honesty, integrity, loyalty and good faith. A trustee must also ensure that their own interests do not conflict with those of the beneficiaries. 

Understand the trust

Trustees must obtain a copy of the trust deed, read it and understand it. The trustee must understand the powers that are given under the trust deed and administer the trust in accordance with its terms. 

To act impartially between the beneficiaries

Trustees must not favour one beneficiary over another and must balance potentially competing interests. One beneficiary should not suffer at the expense of another. 

To provide information

Trustees must keep up to date, clear and accurate records and accounts of the trust. Whilst there is no obligation to share all information and documents with the trustees, the trustees should communicate with the beneficiaries and keep them updated on the management of the trust. 

To act unanimously

Trustees must act unanimously unless the trust deed says otherwise. 

To exercise reasonable care and ensure the correct distribution of assets

The rights of the beneficiaries will depend on the wording of the trust. It is therefore important that a trustee understands the distribution terms of the trust and follows them carefully. 

To provide income for the beneficiaries and preserve the value of capital

If dealing with a trust with capital assets and where income is received, the trustees should invest the trust assets in a way that produces a reasonable return and that would allow them, if they have the power to do so, to distribute that income to the beneficiaries. They should also manage the trust assets in a way to ensure that the capital value is maintained and preferably increased over time.

What trust information are beneficiaries entitled to?

A beneficiary is entitled to know the existence of a trust and their entitlement under it. However, if the beneficiary only has a contingent interest in a trust (such as having to meet certain conditions or reach a certain age) it may be that the trustees only have to take reasonable steps to inform the beneficiary about the trust and their interest at the time those conditions are met. 

There are no statutory provisions setting out the information that a beneficiary is entitled to. It is up to the beneficiary to ask for the information they require. Case law then determines whether a trustee should provide that information. 

As trustees have a duty to keep the beneficiaries informed and provide accounts, it is accepted that they are entitled to copies of the trust accounts. It is also widely accepted that key documents of the trust, such as the trust deed, deeds of appointment, instruments adding assets to the trust and instruments varying the trust should be disclosed. A trustee may choose to redact information from these documents if it does not relate to the beneficiary making the request. 

However, a beneficiary is not automatically entitled to all documents relating to the trust. It will be for the beneficiary to show that their interest in the trust is sufficient to warrant disclosure of the information sought. In deciding whether to provide information requested, the trustees will need to consider the best interests of the beneficiaries as a whole. 

Trustees are at risk of costs if they do not disclose information reasonably requested. 

If you would like a trustee to provide you with information, or if you are a trustee and are unsure whether to provide information requested, please contact our team who will be able to advise.  

Can a Trustee be removed?

If there are concerns about how a trustee is managing the trust, it may be appropriate and possible to apply to the court to have them removed. The Court can also give directions to the trustees on how to correctly administer the trust. 

If you are concerned about how a trust is being managed, please get in touch and we can help you. We can also help if you are a trustee who has been accused of a breach of duty or where concerns have been raised about how you are managing a trust.