Does a trustee have the right to resign?

Historically, in terms of our common law, in the absence of a provision in the trust instrument, a trustee was not entitled to resign office except if they gave good reason and obtained the consent of a court (as confirmed in the Meijer v Firstrand Bank Limited case of 2013). However, with the promulgation of the Trust Property Control Act in June 1988, effective from 31 March 1989, Section 21 was introduced to allow a trustee to resign at any time by providing written notice to the Master of the High Court and the ascertainable beneficiaries, regardless of whether the trust instrument allows for it. Section 21 of the Act allows trustees to “resign by notice in writing to the Master and the ascertained beneficiaries who have legal capacity”. This generally refers to beneficiaries with vested rights who are over the age of eighteen years and free of mental illness and who are known to the trustee. A beneficiary obtains a vested right in an asset and/or income and/or capital gains in a trust, either in terms of the provisions of the trust instrument (called a vesting trust), or through the trustees exercising their discretion, but always subject to the rights attached to such vested right. It is also good practice to provide written notice to their guardians in the case of minor beneficiaries or to the tutors or curators of the beneficiaries of the trust.
 
Whom to inform
In practice, many resigning trustees are not aware that they should inform the ascertainable beneficiaries, making any attempted resignation invalid. With charitable trusts, it is particularly difficult to meet this requirement and may invalidate the resignation in law. No trust instrument can make the procedure to resign easier. Note that it is not a requirement of the Trust Property Control Act for the trustee to inform the remaining trustees of their resignation. It may, therefore, be good practice to provide for this requirement in the trust instrument.
 
Can a trustee resignation be refused?
Neither the founder nor the other trustees can refuse a trustee’s resignation. Neither the Court nor the Master of the High Court can refuse the resignation of a trustee either (Meijer v Firstrand Bank Limited case of 2013).
 
Documents to submit to Master
When a trustee resigns, the Master of the High Court requires the original Letters of Authority – or an affidavit from a trustee stating that the original Letters of Authority has been misplaced and that, should it be found in the future, that the trustees will hand it to Master of the High Court – the resignation letter, and a resolution by the remaining trustees accepting the resignation. Alternatively, a trustee may submit their resignation to the Master of the High Court and the beneficiaries known to them, and request the Master of the High Court to contact the remaining trustees to appoint a replacement trustee, if that is required.
 
Effective date of removal when accountability stops
Generally speaking, a resigning trustee should remember that they will be held accountable as trustee for the period that they served as trustee until such time as the Master of the High Court issues a new Letters of Authority removing such trustee. The exiting trustee will be bound by all the relevant statutory and common law duties until such time of their removal and should, therefore, participate in trustee activities until the new Letters of Authority is issued. It is therefore important for the remaining trustees to obtain the new Letters of Authority from the Master of the High Court confirming the removal of the exiting trustee since any decision taken by the remaining trustees before the actual removal of the exiting trustee by the Master of the High Court will be null and void.
As long as the Act’s requirements (discussed above) are met, it may be practical, when considering potential long delays at the Master’s office, to make allowance in the trust instrument for the effective removal of a trustee upon their written resignation and on receipt of proof that the resignation has been lodged with the Master (such as a Master stamped submission), subject to having at least one remaining trustee (Meijer v Firstrand Bank Ltd case of 2013). The Courts will, however, not allow any abuse by a majority of trustees to remove a minority trustee from office in such a manner (du Plessis v van Niekerk case of 2018).
 
Conclusion
It is, therefore, advisable to include sufficient detail in the trust instrument regarding the estate planner’s personal wishes to deal with the resignation of trustees, as well as to consider and adhere to the requirements of Section 21 of the Trust Property Control Act. If there is a breach by another trustee before a trustee, who was planning to resign, is removed as trustee by the Master of the High Court, then it is no defence for such a trustee to argue that they attempted to resign. Such a person may still be held jointly and severally liable for a breach of trust by another trustee. This means that damages may be recovered from a single trustee, more than one trustee, or all the trustees.