On 5 January 2012 the Royal Court of Jersey held In the matter
of the Bird Trusts  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.
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
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.
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