What Are The Duties & Responsibilities Of A Trustee In South Africa?

Written by Mari van der Walt

30 April 2023

The Role of Trustees in South African Trust Law

The trustees of a trust are the centre of any trust activities, as they are responsible for managing and administering the trust in accordance with the trust deed, the Trust Property Control Act 57 of 1988, as well as common law. The main objective of the trustees is to ensure the safeguarding and proper management of the trust’s assets, thereby ensuring that the trust is managed in the best interests of the trust beneficiaries.

This article examines the powers and duties of a trustee, the capacities in which they act, and the different scenarios in which a person may be disqualified from appointment as a trustee and when a trustee may be removed or have their office terminated.

In What Capacity Does a Trustee Act?

A trustee, in essence, acts in two capacities:

  1. Official Capacity: The trustee holds the trust estate, which includes all assets of the trust. The official capacity of a trustee gives rise to a fiduciary relationship between the trustee and the trust beneficiaries; thus, the trustee is held to a higher standard by the trust beneficiaries when managing their affairs.
  2. Private Capacity: The trustee holds his own estate as a private individual, which is kept separate from the estate of the trust.

What Are the Duties of a Trustee?

The duties of a trustee can be derived from both the Trust Property Control Act 57 of 1988, as well as common law and include the following:

  • The lodging of the trust deed at the Master of the High Court upon incorporation or when any amendments to the trust deed are affected.
  • The trustee is obligated to furnish their address to the Master of the High Court and must also notify the Master of the High Court of any address changes.
  • The Master of the High Court may request that the trustee furnish security for the due and faithful execution of their The exception hereto will be when the trustee is exempted by the trust founder from furnishing security in the trust deed.
  • The trustee must always act with care, diligence, and skill when performing their duties in relation to the trust.
  • As soon as assets are held by the trust, the trustee must see to the opening of a bank account at any financial institution in the name of the trust.
  • A trustee must always ensure that there is a separation of trust property from their private property and that the trust’s property must be identifiable as trust property. The identification of such property will commonly be seen in the auditor’s statements and reports of the trust.
  • Should the trust auditor note any irregularities in the trust administration, the trustee must immediately rectify such actions once they become aware thereof.
  • A trustee is to give effect to the trust deed, more specifically, the terms, provisions, and prescripts contained in the trust deed.
  • A trustee is expected to always exercise independent judgment and discretion in all matters relating to the trust.
  • A trustee must always act impartially in that no conflict of interest should arise between the private affairs of the trustee and those of the trust. In addition, any dealings with the trust beneficiaries must be of an impartial nature.
  • A trustee must ensure that proper financial record-keeping is maintained.
  • Any co-trustee or beneficiary may request that an account with regard to the trust activities be rendered, and all trustees must accordingly comply with such a request.

What powers does a trustee have?

The powers of a trustee are usually set out in the trust deed and include the following:

  • the buying or selling of trust property;
  • the management of distributions to be awarded to the trust beneficiaries;
  • the opening of a trust bank account; and
  • any aspect relating to the management of the daily operations of the trust.

Who is disqualified from appointment as a trustee?

A person will be automatically prohibited from being appointed as a trustee in the following scenarios:

  • The trust deed specifically disqualifies them from being a trustee.
  • The proposed trustee is an unrehabilitated insolvent.
  • The Trust Property Control Act 57 of 1988 disqualifies their appointment to the office of trustee.
  • The proposed trustee has previously been removed from the office of trustee due to misconduct.
  • The proposed trustee has been convicted of a crime where dishonesty is an element of the crime.

When may a trustee be removed, and by whom may such removal be effected?

Yes, a trustee may be removed from office. Such removal shall only be valid if done by the Master of the High Court, having jurisdiction over the trust.

A trustee will be removed if:

  • The trustee has been convicted of an offence where dishonesty is an element of such offence, alternatively, any other offence where the trustee has been sentenced to prison without the option of a fine.
  • The estate of the trustee has been sequestrated, liquidated, or placed under judicial management.
  • A court has declared the trustee to be mentally ill or incapable of managing their own affairs or if they are detained as a patient in an institution.
  • The trustee has failed to perform any duty imposed upon them satisfactorily.
  • The trustee failed to tender security to the Master of the High Court.
  • A breach of the beneficiaries’ trust due to the trustee’s conduct.
  • There are any other circumstances that a court may find justify the removal of a trustee from office.

When will the office held by a trustee be terminated?

The office of a trustee will be vacant in the following circumstances:

  • the death of the trustee;
  • voluntary resignation by the trustee;
  • the dissolution of the trust as a whole; or
  • any other scenario that the trust deed makes provision for.

Trustees are essential to the functioning of a trust. They are responsible for administering the trust, protecting trust assets, and carrying out the wishes of the trust founder. Trustees must be willing to take on the responsibility associated with this fiduciary position and should be knowledgeable with regard to the laws and regulations that affect trusts. By ensuring that trustees are knowledgeable, reliable, and trustworthy, a trust in South Africa can be a long-term, beneficial investment for those involved.

Contact Burger Huyser Attorneys trust lawyers for any trust-related matter. Our trust experts are ready, knowledgeable, reliable, and trustworthy.

DISCLAIMER: Information provided in this article does not, and is not intended to constitute legal advice. READ MORE