Bound by the trust

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Sometimes it is difficult for all trustees to attend a physical meeting. Luckily these days technology has made it easier for trustees to have meetings in the form of audio or audio visual meetings such as conference calls, Skype calls, etc. Alternatively the Courts accept that a trustee, who cannot personally attend a meeting, can make use of a proxy, as long as it is not broadly interprete. Only the use of a proxy to convey the input and vote of the represented trustee, in writing, (without allowing him/her to provide his/her own input and/or cast his/her own vote) will result in valid decisions taken by the trustees (Steyn v Blockpave case of 2011). The reasoning behind this is that the Trust Property Control Act 57 of 1988 only allows duly appointed trustees to act on behalf of a trust; i.e. if one is approved in writing by the Master of the High Court.

Don't blindly accept trusteeship

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Often a spouse, child, family member or family friend accepts trusteeship, without realising the burden that comes with it. Many people accept trusteeship, but claim ignorance when things go wrong. You will unfortunately not be able to get away with that. All trustees are expected to actively participate in trust matters. One is not allowed to leave the business of the trust in the hands of others. Therefore be mindful to use the services of a trust administrator and think that allows you to not be actively involved in the management of the trust.

Can someone else temporarily stand in for you as a trustee?

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Trustees are guardians of trust assets and have a duty to manage these assets in the best interests of the beneficiaries, as outlined in the trust deed.
The Trust Property Control Act stipulates the duties of trustees - section 9(1) of the act states that a trustee shall, in the performance of his/her duties and exercise of his/her powers, act with the care, diligence and skill reasonably expected of one managing the affairs of another.
A trustee’s active participation in trust matters is expected at all times.

How to build wealth within a trust

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When you do estate planning, your goal should be to:

Protect the value of growth assets in your estate
Protect assets from forced sale by assessing the availability of liquidity in your estate
Reduce exposure to taxes such as Capital Gains Tax and Estate Duty
Limit estate expenses
Ensure the smooth transition of your estate on death

Perpetual existence of trusts a core benefit

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You may have intended to create a trust to leave a legacy for your family, but a 'vanilla' trust deed may have been used that may not reflect your original intentions. Read your trust deed to find out if your intentions are reflected correctly.

Are there alternatives to physical trustee meetings?

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It is not always possible for all trustees to meet. Certain trustees may even use this as an excuse to make decisions behind other trustees’ backs. As long as the trust instrument does not allow for methods which have the effect of contravening the common law, such as the abdication of powers and duties to anyone else, the trust instrument can determine which methods of participation is allowed, or specifically disallowed, such as the use of proxies, electronic or telephonic meetings.

Minor trust beneficiaries

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Under South African law, a minor (a person under the age of eighteen) on his/her own, in general, cannot inherit because they do not have contractual capacity. Therefore, upon the death of a parent, assets bequeathed to a minor in terms of a will, or assets the minor inherits due to the parent dying intestate (without a will), are liquidated and the proceeds invested in the Guardian’s Fund (this fund forms part of and is being regulated by the Master of the High Court) at low interest, with limited access thereto, until the minor turns eighteen.

Trust taxes 101

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The South African Revenue Service (Sars) will not tax amounts in excess of the total income or capital gains received by the trustees, nor will Sars tax more than one person on the same amount. Where income or capital gains is taxed in the hands of the trust, any subsequent distribution thereof will not attract tax in the hands of the beneficiary.