While proper administration of a trust has always been a duty of trustees, the manner in which the duty is discharged is now under scrutiny, particularly following the arrival of the General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Act 22 of 2022 (“Amendment Act”). Trustees are now required, more than ever, to take ownership of their roles and discharge their duties timeously and properly.
A trustee’s role is an active role requiring time and attention to the affairs of the trust. Adopting a passive approach in respect of the trustee role, even if you are an independent trustee, could hold severe consequences, such as jail time and/or fines of up to R10 million.
What follows is a non-exhaustive list of some of the main duties trustees are required to execute in their position as trustee of a trust:
1. Drafting of resolutions in respect of transactions concluded by the trust.
2. Drafting of an agenda for the annual trustee meeting.
3. Holding an annual trustee meeting in which important decisions are made and agreed to by the trustees in relation to the financial statements, bank statements and activities of the trust.
4. Drafting the minutes of the annual trustee meeting to capture the decisions reached and agreed to during the meeting.
5. Opening a bank account for the trust.
6. Registering the trust for Income Tax with SARS.
7. Submitting financial statements and tax returns to SARS.
8. Maintaining records of all FICA documentation of the trust and ensuring that the trust is compliant with the Financial Intelligence Centre Act 38 of 2001.
9. Maintaining all trust documentation in safe custody for 5 years after termination of the trust.
10. Maintaining records of the assets held in a trust and capturing this information in an asset register.
11. Maintaining records of all the accountable institutions that the trust transacts with and capturing the information in an Accountable Institutions register, including updating this register as soon as anything changes to ensure compliance with the Amendment Act.
12. Informing Accountable Institutions that trustees are acting in their capacity as trustee and not in their personal capacity, including keeping written proof that you have informed the Accountable Institution accordingly.
13. Submitting Beneficial Ownership Registers of the trust to the Master of the High Court and updating the register timeously as soon as any changes occur to ensure compliance with the Amendment Act.
14. Ensuring that the trust deed amendments, trustee amendments and beneficiary amendments are done in accordance with the trust deed and applicable legislation and are lodged with the Master of the High Court for approval.
15. If you have a family trust, ensure that you have appointed an independent trustee.
16. If security must be provided by a trustee to the Master of the High Court, ensure that the trustee provides the necessary security.
17. Changes in the address of the trust must be lodged with the Master of the High Court within 14 days of any such change.
18. Trustees must act with the necessary diligence, skill and care expected of a person who deals with the affairs of another.
19. Invest trust funds on behalf of the beneficiaries if such investment is necessary to act in the best interest of such beneficiaries.
The above-mentioned is by no means an exhaustive list but demonstrates the emphasis now being placed on proper compliance by trustees. A trustee does not only have a fiduciary duty to act in the best interest of the beneficiaries, but also has statutory duties to administer a trust properly.
Our dedicated Trust Office Team specialises in assisting trustees to administer their trusts correctly and meet all of their administrative obligations. Feel free to make contact with our Trust Office Team to discuss how we can help you.
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 has 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).
