If a trust deed is amended, the trustees are required to lodge the amended version of the trust instrument or a certified copy with the relevant Master of the High Court that has jurisdiction (where the trust was registered initially). If a trustee is appointed after the commencement of the TPCA he/she must provide the Master with their address for receiving notifications and processes and if their address changes, they must inform the Master by registered post within 14 days.
Any trustee that is appointed under a trust instrument, section 7 of the TPCA, or a court order, after the commencement of the TPCA, will also need to obtain written authorisation and confirmation from the Master to serve in that role.
As reasonably expected from an individual handling the affairs of another, a trustee must operate with the necessary care, diligence and skill when performing his/her duties and exercising his/her powers.
A provision in a trust instrument cannot exempt or indemnify a trustee from liability for breach of trust if he/she does not demonstrate the appropriate level of care, diligence and skill.
A trustee is obliged to deposit any money that he/she receives in his/her capacity as a trustee into a separate trust account at a bank or building society. Furthermore, there is an obligation on the trustee to declare their role as a trustee to any accountable institution with which the trustee engages in that capacity and to inform them that the relevant transaction or business relationship relates to trust property. The Act further provides that trust property shall not form part of the personal estate of the trustee except in so far as he as trust beneficiary is entitled to the trust property.
Section 11 of the TPCA states that subject to the provisions of the Financial Institutions (Investment of Funds) Act 39 of 1984, section 40 of the Administration of Estates Act 66 of 1965 and the trust instrument provisions, a trustee shall –
explicitly indicate in his/her bookkeeping, the property that he/she possesses in his/her capacity as a trustee;
register trust property or keep it registered in such a manner that clearly identifies it as trust property;
make any account or investment at a financial institution identifiable as a trust account or trust investment;
clearly identify trust property that is not mentioned above.
The Amendment Act did not just amend the TPCA but also introduced changes to the Financial Intelligence Centre Act 38 of 2001 (“FICA”) and a trustee must record the details of accountable institutions that the trust utilises as agents to conduct trust property-related responsibilities and obtain services from.
The introduction of the definition of “Beneficial Owner” was one of the major amendments introduced by the Amendment Act to provide greater clarity regarding ownership and control of trust property and to assist in the prevention and investigation of financial crimes. A Beneficial Owner can include a natural person who directly or indirectly ultimately owns trust property, effectively controls it, or has authority over its administration.
A trustee therefore now also has a duty to –
create and record the beneficial ownership of the trust;
keep a record of the prescribed information regarding the beneficial owners of the trust;
lodge a register of the prescribed information on the beneficial owners of the trust with the Master’s Office;
ensure that the prescribed information mentioned above is kept up to date.
Once a trust has completed serving its purpose or has reasons for deregistration or to be wound up, trustees must obtain written consent from the Master before destroying any documents proving the investment, safe custody, control, administration, alienation, or distribution of trust property before the expiry of a period of five years from the termination of the trust.
If a trustee fails to comply with some of the statutory duties imposed by the Amendment Act, he/she may be guilty of an offence and face a fine not exceeding R10 million, imprisonment not exceeding 5 years, or both. This makes it vital that trustees understand that the scope of their trustee responsibilities has expanded and can hold serious consequences if not complied with.
If you are a trustee and require assistance in clarifying your obligations, make contact with your attorney or a fiduciary specialist who can help you clarify all your responsibilities timeously.
Disclaimer: This article is the personal opinion/view of the author(s) and is not necessarily that of the firm. The content is provided for information only and should not be seen as an exact or complete exposition of the law. Accordingly, no reliance should be placed on the content for any reason whatsoever and no action should be taken on the basis thereof unless its application and accuracy have been confirmed by a legal advisor. The firm and author(s) cannot be held liable for any prejudice or damage resulting from action taken on the basis of this content without further written confirmation by the author(s).
