Jersey: Update: Disclosure Of Trust Documents To Beneficiaries

On 5 January 2012 the Royal Court of Jersey held In the matter of the Bird Trusts [2012] JRC006 that an outgoing trustee is normally under an obligation to hand over all documentation and information (including legal advice) concerning the administration of a trust to the new trustee. However, it should be noted that the Royal Court retains and exercises a supervisory discretion to refuse such disclosure; in such circumstances the onus is on the outgoing trustee to show why the normal rule should not apply.

Position

In this particular case, the issue related to the nature and extent of the obligation of an outgoing trustee to disclose legal advice, obtained at the expense of the trust fund, to the incoming trustee. As legal advice is not "trust property", and therefore not falling within the obligation to deliver trust property to a new trustee pursuant to Article 34 of the Trusts (Jersey) Law 1984 (as amended), the issue needed to be determined by general equitable principals.

The starting position was that a successor trustee steps into the shoes of a retiring trustee and assumes the same duties as the retiring trustee towards the beneficiaries. Therefore a successor trustee is entitled to be placed in the same position, as far as possible, as the retiring trustee and, consequently, if the retiring trustee has information or documents about the administration of a trust, it must normally make these available to the successor trustee.

This would include the delivery of all records, books and other papers belonging to the trust and entitle the successor trustee to inspect and copy other papers (not belonging to the trust) in the hands of the former trustees so far as they contain information relating to the trust; other papers may include minutes of trustee's meetings and the internal memoranda of a corporate trustee and correspondence files. It would also mean that the successor trustee may request information and explanations from the retiring trustee which are not apparent from the trust papers and the retiring trustee is obligated to supply the information requested and take reasonable care that any information supplied is accurate.

However, the Royal Court held that it retains a discretion as to whether specific documents or information are to be supplied in a particular case. For example, it is important there is some element of control as to the reasonableness of requests for information as otherwise the retiring trustee may be plagued with unreasonable requests.

Comment

In this particular case, the retiring trustee failed to discharge the onus of proof not to disclose legal advice to the successor trustee. The Royal Court specifically mentioned that the fact that an outgoing trustee is concerned that information provided may lead to (in its opinion, unjustified) action against it is not a reason to refuse provision of that information provided that it is otherwise properly and reasonably required. Furthermore the Royal Court stipulated that it makes no difference that the information may be sought by the next but one trustee rather than the immediately following trustee.

The position is clear that retiring trustees should, in normal circumstances, disclosure all documentation and information (including legal advice) concerning the administration of a trust to the new trustee to enable a successor trustee to be placed in the same position, as far as possible, as the retiring trustee.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.