Trustee Duties: What You Legally Must Disclose to Beneficiaries

24 Sep Trustee Duties: What You Legally Must Disclose to Beneficiaries

Most people agree to be a trustee as a favour to their family. Nobody hands them a manual. Then years later, a beneficiary asks a question about the trust, and suddenly they are not sure what they are supposed to say, or whether they are allowed to say no.

If that sounds familiar, you are in very ordinary company. Here is a general picture of how disclosure works for New Zealand trusts, and where it usually pays to get someone to look at your particular situation.

What are a trustee’s duties to beneficiaries?

Trustee duties in New Zealand include keeping beneficiaries reasonably informed. Since the Trusts Act 2019, the starting point is that beneficiaries are told they are beneficiaries and are given trust information when they ask for it. Trustees can hold information back in some situations, but that decision needs proper thought.

That was a genuine change in direction. For a long time, plenty of family trusts ran quietly with adult children who had no idea they were named in anything. The thinking behind the shift is simple enough: a beneficiary who knows nothing has no way of telling whether the trust is being run properly.

Do you have to tell someone they are a beneficiary?

Generally, yes. As mentioned, under the Trusts Act 2019, the expectation is that each beneficiary knows they are a beneficiary, knows who the trustees are, hears about changes of trustee, and knows they can ask for more. Trustees are also expected to revisit this as circumstances change, such as a child reaching adulthood.

This is the part that catches out trusts set up in the 1990s and 2000s. Letters were never sent because at the time, nobody expected them to be. Bringing an older trust up to date is one of the more common reasons for reviewing a family trust. And sometimes, that review ends with a sensible conversation about whether the trust is still worth keeping at all.

It also matters where a beneficiary can’t deal with things themselves. Someone acting on their behalf, such as an attorney under an enduring power of attorney, may step into the picture, and that changes who you are actually communicating with.

What happens when a beneficiary asks to see the paperwork?

This is where most trustees start feeling uneasy. Being told you should keep people informed is one thing. Being handed a written request for the trust deed and five years of accounts is another.

Broadly, requests fall into a few different categories, and they are not all treated the same way.

What a beneficiary is asking about	How it generally sits
Whether they are a beneficiary, and who the trustees are	Usually shared without needing to be asked
The trust deed, the accounts, what the trust owns	Usually provided when asked, within a reasonable time
Why the trustees made a particular decision	Not generally something trustees are expected to explain
The trust’s own records and paperwork	Expected to be kept properly by the trustees themselves

That third row is where families come unstuck. A beneficiary can usually find out that money was paid out. Asking why their sibling received it and they did not is a different sort of question, and it is not one the law expects trustees to answer in the same way.

If a request has arrived and you are unsure, there is no harm in acknowledging it, saying you will come back to them, and getting advice first. Answers written in the heat of a family disagreement are the ones that can cause trouble later.

Can a trustee refuse to share information?

Sometimes. A trustee can decide not to share particular information, but the law expects that decision to be weighed carefully rather than made by default. Things like a beneficiary’s age and situation, confidentiality, and the effect on the family all come into it, and the reasoning should be recorded.

The distinction that matters is between a decision and silence. A trustee who thought about a request, took advice, and decided to withhold something is in a very different position from a trustee who simply never replied. If the honest answer is that nothing has ever been shared with anyone, that is worth sorting out before someone forces the issue.

The other duties that come with the role

Disclosure is one part of a bigger job. Your legal duties also cover how you look after the trust itself, and a few of them are worth knowing by name.

• The trustee’s duty of care. You’re expected to act with the care and skill that is reasonable in your situation. More is expected of someone who does this professionally than of a family member doing their best.
• The trustee’s duty of impartiality. You’re expected to be fair between beneficiaries and not to favour one over the others unfairly. That is not the same as everyone receiving equal shares, which is a common misunderstanding.
• Keeping proper records. Trustees are expected to hold the trust’s documents, including the deed and a record of the decisions made along the way.

Here is the thing worth understanding about the duties and responsibilities of a trustee: some of them can be adjusted by the trust deed itself, and others cannot. Two trustees in seemingly identical situations can have quite different obligations, purely because of how their deeds were written. That is why general information only takes you so far.

Talk it through with someone before it becomes a problem.

Every trust is different, and the answers in your situation depend on your deed, your family, and what has happened so far. That is not something an article can work out for you, and it is not something you should have to guess at while a beneficiary waits for a reply.

A lawyer can read your trust deed alongside your circumstances, tell you what is actually expected of you, and help you handle a request calmly. Whether you are a long-standing trustee or a newly appointed one, book a time to go through it with our legal team in New Lynn. It is a far easier conversation to have before a disagreement starts than after.

Disclaimer: This article gives general information about how the Trusts Act 2019 approaches disclosure. It is not advice about any particular trust or estate, and individual circumstances differ.