Did you know that the requirement for an independent trustee to be appointed to specific trusts in South Africa came about from the 2005 decision of the Supreme Court of Appeal in Land and Agricultural Bank of South Africa v Parker and Others? The court did rule that there wasn’t proper separation of control and enjoyment of the trust assets. The court did suggest the appointment of at least one independent outsider as trustee to every trust where all the beneficiaries are related to one another.
In March 2017, the Chief Master did issue a directive which adhered to the remarks made in the Parker case. This resulted in Master’s offices around our country insisting on the appointment of an independent trustee. The directive does indicate the Master will particularly apply the independent trustee requirements to trusts where:
- Trustees have the power to transact with independent third parties, thus creating trust creditors
- Trustees are all beneficiaries
- Beneficiaries are all related to each other.
Consider these points about an independent trustee:
- An independent trustee is responsible for protecting the trust or its creditors from dishonest activities.
- This person would be keen to speak up when other trustees want to take decisions that aren’t in the best interests of the trust and the beneficiaries.
- It should be noted that an independent trustee can’t be the founder or beneficiary of the trust. He also can’t be connected in any way to the trust.
- Appointing an independent trustee offers a safeguard for the trust.
- This person must have knowledge about the law applicable to trusts.
- This person can’t benefit from the income or assets of the trust.
- An independent trustee needs to have his finger on the pulse of all activities of the trust, as he is there to make sure that the trust operates in the interests of the beneficiaries, and in compliance with the law.
- This person has to be objective.
- This person can be known to the family, provided he is an independent outsider.
- The independent trustee can’t be disqualified to act as trustee by the Trust Property Control Act.
Would you like to have a living trust created? Do you have questions about your living trust? There are many advantages of having a living trust created.
I am an experienced and knowledgeable Trust Specialist who can assist you by creating a living trust that is suitable for your personal situation. Each and every client is unique and has different circumstances. I look forward to meeting with my clients and discussing the necessity of having a living trust and explaining the details around living trusts. Are you ready to find out more about why you should consider choosing the living trust option and why this can be an ideal solution for you and your family? Get in touch today.
DR MERVIN MESSIAS
JD (Juris Doctor) / BA, LLB (Wits) / TEP (Trust & Estate Practitioner)
Book an appointment with my Executive Assistant, Jutleth Mkhonza. Email email@example.com or call +27 (0) 11 783 0108.