Many trustees believe that once a trust has been registered, there is little left to do apart from signing the occasional document. In reality, a trust is a living legal structure that requires ongoing oversight, informed decision-making, and continuous compliance. Much like an annual medical check-up helps identify health concerns before they become serious, an annual trust “health check” helps ensure that the trust continues to operate effectively and complies with its legal obligations.
Trustees in South Africa are subject to numerous statutory, common law, and regulatory obligations and carry a significant legal responsibility. Compliance extends far beyond preserving trust assets and acting in the best interests of beneficiaries. It also requires proper governance, accurate record-keeping, statutory compliance, sound financial management, and transparent decision-making. Trustees who understand and consistently apply these minimum standards are far better equipped to fulfill their duties and reduce the risk of personal liability.
The administration of trusts in South Africa is primarily governed by the Trust Property Control Act 57 of 1988. This legislation serves as the foundation for trust administration, setting out how trusts must be managed and stipulating the legal duties and responsibilities of trustees.
Why does this matter?
The answer lies in the exceptionally high standard of care expected of every trustee. In Sackville West v Nourse, the court confirmed that a trustee is required to exercise a higher degree of care when administering trust property than they would when managing their own personal affairs.
Being appointed as a trustee is therefore not merely a title or administrative role. It is a legal office that carries significant fiduciary duties and responsibilities.
To help you get started, we recommend the following three steps for your trust’s annual health check:
An ANNUAL TRUSTEE MEETING as starting point.
During this meeting the trustees should review the trust’s financial position, investment performance, insurance arrangements, and distributions. They should also consider whether the trust continues to achieve the objectives for which it was established. Equally important is ensuring that trustee decisions are properly recorded by way of meeting minutes and written resolutions.
Ensure ADMINISTRATIVE COMPLIANCE.
Trustees should ensure that all trust records are complete, accurate, and up-to-date. This includes maintaining trustee registers, beneficial ownership registers, FICA documentation, accounting records, and other statutory records. Incomplete or outdated records can cause unnecessary delays when dealing with banks, the Master of the High Court, SARS, and other regulatory authorities.
TAX COMPLIANCE deserves special attention.
Trustees are responsible for ensuring that the trust complies with its obligations to SARS. Annual income tax returns should be submitted timeously, taxes paid where applicable, and distributions should be correctly accounted for. Reviewing the trust’s tax affairs annually enables trustees to identify potential issues before they arise.
A trust, like your health, benefits from regular check-ups. Taking the time to review your trust each year can help identify compliance risks early and avoid unnecessary legal, administrative, and tax complications.
The three steps outlined above provide a practical starting point, but they are by no means exhaustive. Trustees should obtain professional advice where appropriate.
As with most things in life, prevention is far easier (and significantly less expensive) than cure.
Article by: JANDRA ZANDBERG (LLB) Senior Associate
For more information contact Jandra at 044 601 9900 or jandra@rgprok.com.
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