Jersey trustees are currently having to spend a lot of time
complying with international reporting requirements, such as FATCA
and CRS. However, two recent cases demonstrate that the long
standing issue of disclosure of information to Beneficiaries of
trusts can still cause difficulties and should not be
Under Jersey trust law, there is a strong presumption that many
categories of Beneficiaries should be provided with a copy of trust
documents and accounts if these are requested, unless there is a
good reason to refuse.
A question that has recently arisen in an English case is
whether advice provided by lawyers to the trustee is privileged and
therefore exempt from this requirement to disclose to
Beneficiaries. In the case of Blades –v- Isaac and
Alexander the Beneficiaries wished to see legal advice
provided to the trustees. Although acknowledging there is no
absolute right for Beneficiaries to see trust documents, if legal
advice is a trust document then a trustee would normally need a
positive reason to refuse disclosure to a Beneficiary.
However, if the advice were not a trust document and
privileged then the trustee could refuse disclosure. The
court distinguished between advice sought personally, perhaps if
the trustee was concerned about a personal attack, and advice
obtained as trustee for the benefit of the trust. If the trustee
was seeking personal advice than they would normally have
personally to pay for this advice. The court made it clear that a
trustee cannot expect to take legal advice at the expense of the
trust fund and then expect this advice to be viewed as personal to
it. This distinction can be easily overlooked, and when seeking
legal advice trustees need to consider who should pay and whether
they wish it to be privileged. Not all legal advice is
privileged in any event, but a trustee does need to consider
privilege and not assume that any legal advice is confidential from
everyone. It may well be, for example, that legal advice
would be privileged as against third parties seeking to attack the
trust or its assets. However, if this advice is a trust
document then the privilege is vested in the trust and the advice
likely available to the Beneficiaries. Although this was an
English case, it is likely that this position would be reflected in
the Jersey courts.
The question of disclosure to Beneficiaries can cause concern to
Settlors, perhaps if Beneficiaries are young or otherwise
vulnerable. It is quite common for Settlors to wish to
restrict access in trust deeds. However, a recent Guernsey
case emphasised the difficulty with achieving this and confirmed
that such restrictions could not override trustees' fundamental
duty to account to Beneficiaries. Therefore, even the
inclusion of express provisions in the trust deed restricting
disclosure to Beneficiaries in the trust deed are unlikely to
prevent Beneficiaries gaining access to certain trust documents and
accounts. Again, we consider this would be the position in
the Jersey Courts.
These recent cases demonstrate that Beneficiaries' rights to
access information about trusts still causes issues and Trustees
must ensure they consider this when seeking legal advice and
drafting trust deeds.
This article first appeared in the JEP Wealth Management
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