Do you feel that your trustee may have been keeping you “in the dark” about information regarding your trust? Do you feel as if the trustee is favouring another beneficiary over you? Or do you suspect the trustee is misusing their position when it comes to handling assets of the trust?
Under the Trustee Act 1925 (NSW), trustees are required to exercise their powers in the best interests of present and future beneficiaries. A trustee’s duties include, among other things:
- Acting impartially towards beneficiaries;
- Maintaining and protecting trust property, including real and personal property, capital and income;
- Keeping accounts and supplying information to beneficiaries;
- Not to profit personally from being a trustee, unless the Trust Deed allows for it; and
- ‘Considering’ how best to exercise their power and discretions.
If you believe your trustee is not acting in your trust’s best interests, you or other beneficiaries of the trust can request an inspection of trust records and documents. As a beneficiary, you also have the right to inspect any property which is being held under the trust and information regarding the way the trustee is dealing with the property.
It is important to note that your right to inspect documents and records does not necessarily extend to incidental documents relating to trust matters, for example, correspondence between trustees. There are instances where a trustee will not necessarily be obliged to produce documents and records regarding the management of trust matters, such as beneficiaries of a discretionary trust and specific or fixed beneficiaries.
As the beneficiary of a trust, you have the right to see that the trust is properly enforced. If upon inspection of trust records and documents, you discover a breach, or possible future breach of the trustee’s powers, you may make an application to the court for an injunction to stop the trustee from continuing to breach the trust, or to stop threatened future breaches.
If it is determined that a trust is not being properly administered, you also have the option to make an application to court to remove the trustee.
We highly recommend that you seek legal advice if you feel that your trustee is acting improperly, as courts do have the discretion to excuse a trustee from a breach if the court believes the trustee acted honestly and in the best interests of the beneficiaries.
For a thorough discussion of your legal options as a beneficiary, contact our experts at PMF Legal for an assessment of your situation.