Trust deeds

In South Africa, trusts are governed by the Trust Property Control Act of 1988 (TPCA). A trust’s constitutional document is a trust deed, which sets out the framework in which the trust must operate, including its powers and limitations. Trusts are registered by the Master of the High Court. The trust division of the Master’s office maintains a trust file and controls any queries regarding trusts.

A trust deed may be considered to be a manual for the trustees and sets out all the information regarding the founder/donor, trustees, beneficiaries, the objective of the trust, any possible conditions that may apply, and the powers and functions of the trustees, amongst others. It may typically contain clauses that attempt to protect the estate planner, such as the inclusion of a casting vote, a testamentary reservation, and so on.

The deed is drafted according to the TPCA to regulate the governing of a trust. The trust can then be registered as a legal entity. Once registered, you will be able to transfer your assets into the trust. This allows you to control the benefits your family obtains from your estate/income; it also provides you with tax benefits in the process.

If you have registered a trust, ensure that you review and amend your trust deed and remove any provisions that may impact your estate negatively, especially if you have not made provision for additional estate duty and capital gains tax payable on your death, as a result. There are better ways to structure a trust deed to provide the estate planner with some level of influence without falling foul of this onerous provision of the Estate Duty Act.

A trust does not have legal personality because it is simply an accumulation of assets. In some circumstances – such as for tax purposes – it is regarded as having a separate legal identity. Despite its lack of legal personality, a trust can have legal capacity and the trustees may perform juristic acts as long as the trust deed allows this.

A trust will end by written agreement, on the date set out by the founder, or upon the achievement of the trust objective, or upon the realisation that the trust objective cannot realistically be achieved. Upon dissolution, the trust’s assets will devolve as contemplated in the trust deed.

Trustees are always required to act in good faith and make sure that trust assets are administered with the necessary proficiency. They are legally bound to the trust deed and are thus to act in accordance with it.

See this related article: Definitions: ownership, bewind, and curatorship trusts.