12 May THE TRUST PROPERTY CONTROL ACT No. 57 of 1988
The Trust Property Control Act came into force on 31 March 1989, and was amended by the Justice Laws Rationalisation Act, No. 18 of 1996.
It serves as an operational framework shaped by case law, and is monitored by the regional Masters of the High Court. The Masters hold jurisdiction in their designated regions and exercise their authority over the Trusts registered and accepted in those regions.
The purpose of the Act is to define, regulate and govern the formation and administration of trusts. Other statutes, such as the Income Tax Act (which includes Capital Gains Tax), the Transfer Duty Act, and the Estate Duty Act also apply to trust law.
The Act can be accessed in full at www.gov.za/documents/trust-property-control-act-18- may-2015-1117. We urge clients to reference the Act online and get to grips with the terminology and regulatory structure of trusts in South Africa.
Definitions explained in the Act:
a contract through which the ownership in property of one person is made over or bequeathed to another person (a or b) via a trust. It is administered, or disposed of according to the provisions of the trust instrument (or trust deed) for the benefit of the people designated in it, or for the achievement of the purpose stated in it.
A trust instrument:
a written agreement that identifies the purpose, and the terms and conditions of the trust, nominates the trustees and names the beneficiaries.
a person who administers the assets of the trust for the benefit of the beneficiaries named in the trust instrument.
Trust property: movable or immovable property, as well as contingent interests in property.
- It covers what is required to create and alter a trust as well as what needs to be lodged with the Master, together with the prescribed fee.
- It describes the parameters, requirements and security required to authorise and appoint a trustee.
- The Act entrenches the required performance standards and powers of trustees.
- It specifies how trust property should be identified and registered so that it complies with the Act.
- It clearly mandates that trust property should be separated from the personal estate of the trustee, unless he is also a trust beneficiary and entitled to the trust property.
- It empowers the court to vary trust provisions under specific conditions.
The Act clearly stipulates that any irregularities in administration must be reported. The reporting and correction process is also prescribed.
- It empowers the Master to call trustees to account for irregularities and maladministration and authorises him to appoint a suitably qualified person to investigate the matter.
- It also stipulates that if a trustee fails to account or perform any duty imposed on him by the trust instrument or by law, the Master may request compliance or remove the trustee, subject to specific conditions.
- The Act makes provision for both the remuneration and resignation of trustees.
- The safe custody of documents is clearly prescribed in terms of manner and time period.
- The Trust Property Control Act grants peace of mind and provides the reassurance that it has the muscle to enforce the procedural checks and balances that prevent abuse or mismanagement of trust funds.