Parties To A Trust And Role Players Responsibilities Explained

A South African inter vivos trust has three named parties — the founder (the person who creates and funds the trust), the trustees (who hold and administer the trust property), and the beneficiaries (for whose benefit the trust exists) — plus the Master of the High Court as the statutory supervisor and, increasingly, a protector whose appointment sits in the trust deed. Trustees must hold letters of authority issued by the Master under section 6 of the Trust Property Control Act 57 of 1988 before they can deal with trust property, exercise their powers only by written resolution under section 20, and lodge annual financial statements with the Master. Layered on top, the common law imposes fiduciary duties — care, skill and diligence, good faith, avoidance of conflicts of interest, and no secret profit. Beneficiaries are entitled to reasonable information about the trust’s administration; connected persons (relatives, controlled entities, other trusts in which the trustee has an interest) are caught by the Income Tax Act 58 of 1962’s reporting regime.

This article unpacks each role, the duties it carries, the statutory source of those duties, and where the most common practical traps sit — from letters of authority, written resolutions and annual lodgement with the Master, to the connected-person rules that drive donations tax, Section 7C and capital gains attribution.

The Statutory and Common-Law Framework

South African trust law is layered. The principal statute sets the procedural and supervisory floor; the common law layers fiduciary duties on top; a separate tax statute polices who counts as a connected person; and a few additional statutes govern the special case of trusts created by will.

• Trust Property Control Act 57 of 1988 (TPCA) — the principal statute. It governs how trustees are appointed, authorised and supervised, and sets the supervisory powers of the Master of the High Court.
• Common law — fiduciary duties (care, skill and diligence; good faith; no conflicts; no secret profit) sit on top of the TPCA and are not replaced by it.
• Income Tax Act 58 of 1962 — defines connected person in section 1, drives donations tax, capital gains attribution, and the Section 7C anti-avoidance rule for loans by a trust to a connected person.
• Hague Convention on the Law Applicable to Trusts and on their Recognition (1992) — recognised by South Africa in 1996; relevant when a trust has cross-border elements or recognition of a foreign trust is in issue.
• Wills Act 7 of 1953 and Administration of Estates Act 66 of 1965 — govern the creation and administration of testamentary trusts (trusts created by will on death), as distinct from inter vivos trusts created during the founder’s lifetime.

Where the trust deed and the Act conflict, the Act wins. Where the Act is silent, the common law fills the gap. Where both are silent, the trust deed governs — which is why the deed is so carefully drafted at formation.

The Three Named Parties: Founder, Trustees and Beneficiaries

South African trust law names three parties. Each is a separate role with a separate function; conflating them is the most common source of confusion when readers first encounter the framework.

The Founder (Settlor)

• The person who creates the trust and contributes the initial trust assets — also called the donor in older terminology, the settlor in English-derived authorities.
• No automatic continuing role after creation — the founder’s involvement depends on what the trust deed says (and on whether a protector role is included).
• The founder may also be a beneficiary, or even a trustee, but the combined role carries its own conflict-of-interest pitfalls under common law.
• A founder who retains excessive control can have the trust disregarded for tax purposes — SARS looks at substance over form when assessing who actually controls the trust property.

In practical terms, the founder’s role is largely completed at the moment of execution and lodgement. The founder’s choices made at creation — what was funded, in whose name, under what deed terms — continue to shape the trust for its lifetime.

The Trustees

• The people who hold and administer the trust property; they hold an office, they are not employees or agents of the beneficiaries.
• At least one trustee is required for the trust to function; usually two or three is the practical minimum so a trustee can break deadlock and act collectively.
• A trustee must be a person capable of holding office — natural persons, or certain juristic persons (a corporate trustee / professional trustee company specifically authorised in the trust deed).
• A trustee who has been convicted of certain offences, is insolvent, or is otherwise unsuitable can be removed by the Master.

The trustee is the only role with operational responsibility for the trust — collecting income, paying expenses, keeping records, lodging returns, and (where the deed permits) making distributions. Every other role either supervises, advises, or benefits.

The Beneficiaries

• Persons for whose benefit the trust exists — they are the equitable owners of the trust property.
• Income beneficiaries receive trust income as the trust deed directs; capital beneficiaries are entitled to trust capital, normally on a defined event (a date, a life stage, the death of the income beneficiary).
• Beneficiaries can be named, or a class (the children of X, the descendants of Y); a discretionary beneficiary’s interest depends on the trustee’s election.
• A beneficiary has standing to enforce the trust in court and can approach the Master where the trustee is failing.

The legal title sits with the trustee; the equitable ownership sits with the beneficiaries. That split — and the duty it implies on the trustee — is the conceptual core of a trust.

The Statutory Supervisor: The Master of the High Court

The Master of the High Court supervises trust administration under the TPCA. The Master’s authority extends to investigating complaints, requiring documents, and (in defined cases) removing or replacing trustees. The Master is the office the trustees report to — and the office a beneficiary approaches when a trustee is failing.

• Letters of authority — the Master issues these before a trustee can act; a trustee who deals with trust property without letters of authority is acting outside the statutory framework.
• Annual lodgement — trustees are expected to lodge annual financial statements with the Master’s office; persistent failure to lodge is a ground for Master’s inquiry.
• Investigations and removals — the Master can require documents, convene inquiries, and remove a trustee for defined grounds (insolvency, certain convictions, dereliction of duty, failure to lodge documents).
• Geographical organisation — the trust is registered in the Master’s office of the High Court division where the trust deed was first lodged, and that office’s jurisdiction continues over the trust’s administration.

For Gauteng-based inter vivos trusts, this is typically the Master of the High Court, Johannesburg, where letters of authority, the trust deed and supporting documents are lodged and where trustees’ annual financial statements are filed. Testamentary trusts (created by will on death) are lodged in the Master’s office where the deceased was resident, and that office’s jurisdiction continues over the trust’s administration.

The Optional Role Player: The Protector

A protector is not a creature of statute in South Africa — the role exists only if the trust deed creates it.

• Typical protector powers: consent to certain trustee decisions (amendments to the trust deed, removal or addition of beneficiaries, change of trustee), and review trustee accounts.
• The protector is not a trustee — they usually hold no fiduciary duty to beneficiaries in the same way a trustee does, although the deed can draft duties into the role.
• Protectors are increasingly common in modern (especially cross-border) trust deeds drafted in SA; older deeds and testamentary trusts frequently omit the role entirely.

For families drafting a new trust, the protector is a useful structural lever — it lets the founder step back from the trust while keeping an oversight role, and it gives beneficiaries a route to challenge trustee decisions without going to court. Drafting the protector role clearly at formation is the difference between a role that works in practice and a role that causes deadlock.

Connected Persons: The Tax-Side Definition

The Income Tax Act 58 of 1962, section 1, defines a “connected person” relative to a trust. It is a different concept from “beneficiary” — and confusing the two is the source of many avoidable tax problems.

• Who is caught — the trustee and their relatives, other trusts in which the trustee has an interest, and entities controlled by or under common control with the trust.
• Why it matters — drives donations tax, capital gains tax attribution, and Section 7C anti-avoidance (loans by the trust to a connected person).
• Not the same as “beneficiary” — a beneficiary is not automatically connected, and a connected person is not automatically a beneficiary.
• Common consequence — a trustee who disposes of trust assets to a connected person below market value may trigger donations tax liability for the trust.

Duties of Trustees: Statutory Floor

The Trust Property Control Act sets a procedural floor. A trustee who steps outside it acts beyond authority and is personally liable.

Statutory duty	Source	What it requires
Hold letters of authority before acting	TPCA section 6	Lodge trust deed and acceptance with the Master; wait for authority before dealing with trust property.
Act by written resolution	TPCA section 20	Pass resolutions (majority, or unanimous where the deed requires); file a copy with the Master.
Keep proper books and records	TPCA (general supervisory duty)	Maintain an account of all trust transactions and supporting documentation.
Lodge annual financial statements	Master’s practice (under TPCA supervisory power)	Submit to the Master’s office each year; failure to lodge is a ground for Master’s inquiry.
Register with SARS and report	Income Tax Act 58 of 1962	Trust income tax returns; IT3(t) and IT3(c) certificates to beneficiaries.

Duties of Trustees: Common-Law Fiduciary Duties (Layered on Top)

The common law adds duties the Act does not spell out. They sit on top of the TPCA — not in place of it.

• Duty of care, skill and diligence — the standard of a prudent person managing the affairs of another; professional trustees (attorneys, accountants) are held to a higher standard matched to their expertise.
• Duty to act in good faith and in the interests of the beneficiaries — the trustee cannot prefer the founder’s wishes over the deed, third parties over beneficiaries, or one beneficiary over another without authority.
• Duty to avoid conflicts of interest — disclose and recuse where the trustee has a personal interest; undeclared conflicts can invalidate the transaction and lead to removal.
• Duty not to profit from the office — trustees can be reimbursed for reasonable expenses and (where the deed permits) receive income as a beneficiary, but cannot take secret profits.
• Duty to act jointly — trustees must generally act collectively; a single trustee cannot bind the trust without authority from the others.

For trustees who happen to be attorneys, accountants or other professionals, the higher skill standard is not optional — it is the level they are held to by default, and the level Burger Huyser Attorneys’ own practitioners apply when sitting as trustees on family trusts across its Gauteng branches.

Duties of Founders and Beneficiaries

The founder and beneficiaries are not the operational parties — but they each carry their own responsibilities and limitations.

• Founder — generally owes no duty to the trust once it is created, but continues to bear the consequences of choices made at creation: tax attribution, exchange control if assets were funded across the border, and the risk of the trust being disregarded for lack of separateness.
• Beneficiaries — must act reasonably in dealing with the trustees (no harassment, no fraudulent claims on trust property), and must declare any trust benefits received on their own tax return. The trust sends IT3(t) (income) and IT3(c) (capital) certificates to each beneficiary each year.
• Beneficiaries have rights, not duties, in the substantive sense — the right to be considered (where their interest is vested), the right to reasonable information about the trust’s administration, and the right to approach the Master where the trustees are failing.

Working With Connected Persons: Practical Tax Traps

Trustees deal with connected persons more often than they realise — the trustee’s own spouse, the trustee’s other trust, a company the trustee controls. Each transaction has a tax rule that can catch the unwary.

Scenario	Rule	Consequence if ignored
Loan by trust to connected person	Section 7C, Income Tax Act 58 of 1962	Donations tax on the loan amount each year; the section 7C rules impose a deemed donation unless an interest exemption applies.
Donation by trust to connected person	Sections 54–64, Income Tax Act 58 of 1962	Donations tax at the trust level (20% within the same donor, 25% above a rolling threshold, current rates as updated by SARS).
Sale of trust asset to connected person	General anti-avoidance and fair-value tests	Tax on the difference between market value and consideration; possible accumulation of donor liability for natural-person donees.
Vesting of income in a connected-person beneficiary	Section 7 anti-avoidance and beneficiary declaration	Beneficiaries must declare vested amounts; tax ultimately borne by the beneficiary.

For trusts that have any cross-border funding or where the founder retains a connection to the trust after creation, the connected-person and Section 7C rules are where most of the avoidable tax exposure sits. The firm’s Wills & Estates and Trusts practice areas meet here — drafting the deed to anticipate these transactions at formation is cheaper than unwinding them at SARS audit.

Comparing the Role Players at a Glance

A quick reference for who does what, who appoints them, where their authority comes from, and who can remove them.

Role	Appointed by	Source of authority	Main duty	Can be removed by
Founder (settlor)	—	Creates the trust deed and contributes assets	None once the trust exists; continues to bear the consequences of the choices made	Not applicable
Trustee	Trust deed (and letters of authority from Master)	TPCA section 6 plus the deed	Administer the trust in good faith and within the deed	The Master, the court, or a co-trustee resolution where the deed allows
Beneficiary	Trust deed	Deed plus common-law equitable proprietary interest	Act reasonably; declare benefits on tax return	n/a (interest can be terminated, varied, or excluded per the deed and the Act)
Master	Statutory office	TPCA section 5 and following	Supervise trust administration	n/a
Protector	Trust deed	The deed only (not a statutory role)	Consent to the trustee actions the deed lists	The deed (typically a deed-defined removal mechanism)

Liabilities and Removal: What Happens When a Role Goes Wrong

Trustees are personally on the hook. Knowing how that liability attaches is the difference between a recoverable mistake and a personal claim by the trust or its beneficiaries.

• A trustee who acts outside authority — without letters of authority, beyond the trust deed, or in breach of a duty — is personally liable to the persons the trustee committed the trust to.
• Co-trustees are jointly and severally liable where they collectively authorise the breach.
• The Master can remove a trustee who is insolvent, has been convicted of certain offences, is derelict, or fails to lodge required documents.
• Removal does not absolve the trustee of liability for breaches committed before they left office.
• A beneficiary who misuses trust information or who colludes in a breach can lose protection and may be liable to the trust.

For trustees facing a Master’s inquiry, a beneficiary dispute, or a constructive conversation with SARS, the practical first step is a structured meeting with an admitted attorney who sits regularly in the Master’s office — not a generic consultation. The firm’s Trusts practice takes instructions in this kind of work, particularly where the inquiry has escalated to a removal application or where co-trustees are at odds.

How the Parties Fit Together in Day-to-Day Administration

The framework comes together in the trust’s daily administration. A typical sequence, in the order it actually happens:

1. Founder creates the trust deed, contributes the assets, and (if the deed allows) steps out of the picture — although modern deeds often retain a founder as protector for life.
2. Trustees apply to the Master for letters of authority, hold the trust property, pass written resolutions, and lodge annual financial statements.
3. Master issues letters of authority, supervises compliance, and can investigate complaints.
4. Beneficiaries receive income and/or capital as the deed and trustee decisions direct, and are entitled to reasonable information about the trust’s administration.
5. Protector (if appointed) consents to specific trustee decisions, mostly around changes to the deed, the trust’s terms, or its structure.

When a step breaks down — a trustee acts without letters of authority, the founder tries to direct the trustee, the protector refuses to consent — the TPCA gives the Master and the court the tools to fix it. They are slow tools; the cheaper answer is to draft the deed carefully at the start.

If the discussion of who the parties are in a trust and what each role actually carries has surfaced a question about a specific trust — formation, an administration that is not working, an upcoming cancellation, or a Master’s inquiry that needs a response — Burger Huyser Attorneys’ Trusts practice handles trust formation, administration and cancellation across its Gauteng branches and is available for a structured first conversation through the Linden/Randburg head office on 011 888 0246 (after-hours 061 516 6878), 49 First Avenue, Linden, Randburg, 2194. The firm carries a 4.8/5 average across 250+ Google reviews (Trustindex-verified “Top Rated Law Firm in South Africa”) and fields this work through its Trusts practice area in coordination with attorneys handling deceased estates, wills and tax-attribution issues where those overlap.

Frequently Asked Questions

Who are the three parties to a trust in South Africa?

The three named parties are the founder (the person who creates and funds the trust), the trustees (who hold and administer the trust property), and the beneficiaries (for whose benefit the trust exists). The Master of the High Court is the statutory supervisor, and a protector may also be appointed where the trust deed creates the role.

What is the role of the Master of the High Court in a trust?

The Master supervises trust administration under the Trust Property Control Act 57 of 1988, issues the letters of authority that trustees need before acting, requires annual financial statements, and can investigate complaints, remove failing trustees, and refer serious matters for further action. The Master’s office is the trust’s supervisory authority, not its operator.

Does a trustee need letters of authority in South Africa?

Yes — a trustee must obtain written authorisation (letters of authority) from the Master of the High Court before dealing with trust property under section 6 of the Trust Property Control Act. Acting without authority exposes the trustee to personal liability to the persons the trustee committed the trust to.

Can the founder also be the trustee?

Yes, but with care — a founder who is also a trustee still owes common-law fiduciary duties to the other beneficiaries, and combined roles can trigger conflict-of-interest disclosures in the trust deed and (depending on substance) tax authorities may treat the arrangement as falling short of a properly constituted separate trust.

What is a “connected person” relative to a trust?

A “connected person” is defined in section 1 of the Income Tax Act 58 of 1962 and covers, broadly, the trustee and their relatives, other trusts in which the trustee has an interest, and entities controlled by or under common control with the trust. The definition drives donations tax, section 7C anti-avoidance, and capital gains tax attribution — a connected person is not automatically a beneficiary, and a beneficiary is not automatically connected.

What duties do beneficiaries have?

Beneficiaries have rights, not duties in the substantive sense — but they must declare trust benefits on their own tax return (the trust sends IT3(t) for income and IT3(c) for capital each year), act reasonably in dealing with the trustees, and cannot direct the trustee or interfere with administration. Beneficiaries are entitled to reasonable information about the trust’s administration.

Can a trustee be removed?

Yes — the Master can remove a trustee in defined circumstances (insolvency, certain convictions, dereliction, failure to lodge documents) under the TPCA. Co-trustees or beneficiaries can apply to the Master on grounds of incapacity, dereliction of duty, or conflict. Removal does not absolve the trustee of liability for breaches committed before they left office.