A common situation: a parent has died or stepped back, one sibling now runs the family company that acts as trustee, and the other siblings are beneficiaries who receive little or nothing and are told very little. They ask to see the trust deed and the accounts, and the answer is “it’s confidential” or “you don’t need to know.”
For Chinese and Asian families, where trusts often hold the family business and properties built by the parents, this kind of silence can quickly turn into suspicion and then into a dispute. This article explains what a beneficiary of an Australian family trust can generally ask to see, what a trustee can usually keep private, and how to raise the issue without making the relationship worse.
Why beneficiaries have a right to information at all
A trustee holds property for the benefit of others and must account for it. Beneficiaries cannot hold a trustee to its duties if they cannot find out what the trustee is doing. For that reason, courts have long accepted that beneficiaries may see certain trust documents, and that the court itself supervises the administration of trusts.
The difficulty is that in a discretionary trust, beneficiaries have no fixed entitlement. They have only a right to be considered and a right to proper administration. The question is how much information that kind of interest carries.
What a beneficiary can usually see
As a general guide, and subject to the deed and the facts, a beneficiary with a real interest can usually ask for:
- The trust deed and all variations. These are the rules of the trust. A beneficiary is ordinarily entitled to know them, including who the trustee and appointor are and what powers they hold.
- Financial statements and accounts. These show what the trust owns, what it owes and what income it earns.
- Basic information about their own position, such as whether they are a beneficiary and whether distributions have been made to them, including unpaid entitlements and loan accounts in their name.
Courts tend to treat a close family beneficiary more favourably than a remote member of a wide class.
What a trustee can usually keep private
Trustees generally do not have to disclose:
- Their reasons for exercising a discretion, such as why one sibling received a distribution and another did not, provided they acted honestly and gave real consideration;
- Internal deliberations, such as discussions and working papers behind a decision;
- Legal advice obtained for the trustee’s own protection, particularly about a dispute with a beneficiary; and
- Confidential material from others, which may include a letter of wishes.
If a trustee does give reasons, a court can examine whether those reasons show an error.
Hartigan Nominees v Rydge: the Australian starting point
In Hartigan Nominees Pty Ltd v Rydge (1992) 29 NSWLR 405, the New South Wales Court of Appeal considered whether a discretionary beneficiary could see a memorandum of wishes the settlor had given the trustees. The majority held that the trustees did not have to produce it. The memorandum was confidential, and trustees are not obliged to reveal the reasons for their discretionary decisions. Part of the reasoning was that requiring disclosure could encourage family conflict and litigation.
Kirby P dissented. He considered that beneficiaries’ access should not depend on having a proprietary interest in the trust, and that trustees in Australia should be accountable.
Schmidt v Rosewood and how Australian courts have treated it
In Schmidt v Rosewood Trust Ltd [2003] UKPC 26; [2003] 2 AC 709, the Privy Council, on appeal from the Isle of Man, held that a beneficiary’s ability to obtain trust documents is best seen as part of the court’s inherent jurisdiction to supervise trusts, rather than as a property right. A proprietary interest is neither necessary nor sufficient. On that approach, even a discretionary object may apply, and the court decides what should be disclosed, weighing confidentiality, the interests of other beneficiaries and the nature of the applicant’s interest.
Privy Council decisions do not bind Australian courts, and Australian judges have been divided. Some decisions, including in New South Wales and the Federal Court, have adopted the Schmidt approach; others have continued with the traditional approach based on the beneficiary’s interest in trust documents, as in Hartigan. In practice, both approaches tend to give a close beneficiary access to the deed and accounts, and both tend to protect trustees’ reasons and confidential material. The difference matters most at the edges. The law is not fully settled, and an Australian court may take a different view from courts overseas.
Letters of wishes and confidentiality
Many family trusts have a letter or memorandum of wishes from the founder, setting out how they hope the trustee will use its discretion: support for a disabled child, equal treatment of siblings, or keeping the business in the family. A letter of wishes is generally not binding on the trustee. It is something the trustee may take into account.
Founders should think about whether they want the letter kept confidential, and say so in the letter itself. Courts have given weight to a settlor’s intention of confidentiality. If the family’s peace depends on everyone understanding the founder’s intentions, it may be better to discuss them openly while the founder is alive than to rely on a private document opened later.
Practical steps when you want information
- Confirm you are a beneficiary. Ask for, or obtain, a copy of the trust deed and variations, and check the beneficiary clause.
- Make a specific written request. Ask for identified documents, such as the deed, the last three years’ financial statements and any distribution resolutions affecting you. A narrow request is harder to refuse.
- Explain your interest. State why you need the information, for example to understand your loan account or tax position.
- Offer confidentiality. Offering to keep commercial information confidential can remove a common objection.
- Keep the tone measured. A courteous request leaves room for a negotiated outcome between siblings.
- Consider a family meeting or mediation. A neutral facilitator can help siblings discuss information, distributions and the future of the trust before positions harden.
- Court as the last resort. If information is still refused, a beneficiary can apply to the Supreme Court in its supervisory jurisdiction. Costs can be significant, and outcomes depend on the facts.
If you are the trustee
Trustees reduce the risk of a dispute by keeping proper minutes, preparing annual accounts, responding to reasonable requests promptly and getting advice before refusing. Where a request is difficult, a trustee may apply to the court for directions rather than guessing. Clear, early communication with siblings is usually cheaper than defending litigation.
Frequently asked questions
Can a beneficiary see the trust deed?
Generally, yes. A beneficiary with a genuine interest is usually entitled to see the trust deed and its variations, because these set out the rules the trustee must follow.
Does a trustee have to give reasons for distributions?
Usually not. Australian courts have held that trustees of discretionary trusts need not disclose their reasons, as long as they act honestly and genuinely consider the beneficiaries. If reasons are given, they can be examined.
Can I see my late father’s letter of wishes for the family trust?
Not automatically. In Hartigan Nominees v Rydge, a confidential memorandum of wishes did not have to be disclosed. The outcome may depend on the deed, whether confidentiality was intended, and the court’s view of the circumstances.
What can I do if my sibling as trustee refuses to give me trust information?
Start with a specific written request and consider mediation. If that fails, you can apply to the Supreme Court, which has power to supervise trusts and order disclosure of appropriate documents.
How Chua Tan Associates can help
Chua Tan Associates acts for beneficiaries and trustees in family trust information requests and sibling disputes. We review the deed, prepare targeted requests or responses, and advise on what the law is likely to require. Justin Chua is a Nationally Accredited Mediator and Family Dispute Resolution Practitioner and Accredited Family Business Advisor, and we often help families set up a family meeting or mediation before a disagreement becomes litigation. We also help founders prepare letters of wishes and deed provisions that make their intentions clear. We work alongside the family’s accountant, assist clients across Australia and overseas, and advise in English, Mandarin and Cantonese.
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Chua Tan Associates acts for families, executors, trustees and their professional advisers in estate planning, estate administration and estate disputes in Australia and across borders. To arrange a confidential consultation, please contact our Melbourne office on +61 3 9602 3988 or submit an enquiry. Advice is available in English, Mandarin and Cantonese.
Justin Chua (蔡智勋), lawyer and mediator, Chua Tan Associates, Melbourne. General information only, not legal or tax advice.
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