The trustees of family or testamentary trusts often don’t realise that they could be held liable if they fail in their duty to manage the trust in accordance with the stipulations of the trust deed. It’s therefore crucial that all trustees undergo trustee training to ensure they’re well equipped to always act in the best interests of the beneficiaries.
The representative trustees of family or testamentary trusts are usually family members of the person setting up the trust. In terms of the Trust Property Control Act 57 of 1988, all trustees, including independent trustees, can be held liable if they don’t perform their duties and exercise their powers with the care, diligence and skill that can reasonably be expected from a person who manages the affairs of another.
Section 9(2) of the Act stipulates that any provision in any trust deed will be void in so far as it would have the effect of indemnifying trustees against liability for breach of trust or failing to perform their duties.
The obligations and responsibilities of trustees can be complex – to empower them to understand their roles and give them the information they need to carry out their duties, it is recommended that all trustees, other than trustees with experience as such, undergo some form of trustee training. At the very least, such training should include legal and regulatory requirements.
Duties of trustees
The duties of trustees in principle include:
Having a thorough understanding of the trust deed
Taking control of the trust assets
Ensuring that the trust assets are invested appropriately and looked after for the benefit of the beneficiaries
Handling the administrative function of the trust
Keeping proper records of the affairs of the trust and all its transactions
Ensuring that accounting records are kept, and tax compliance is done in terms of the trust deed requirements and any tax-exemption requirements (if applicable)
Ensuring that the annual financial statements of the trust are properly reviewed and are a true reflection of the financial position of the trust
Ensuring that trustee meetings are held during which decisions are made and general matters are discussed, including the signing off of annual financial statements
Acting in the best interests of the beneficiaries
Adhering at all times to applicable legislation and the terms of the trust deed, and ensuring that the latter is kept up to date with regard to changes in relevant legislation.
The trust deed
Trustees must ensure they are well acquainted with and observe the terms of the trust deed. The trust deed is the founding document and essentially the ‘constitution’ of the trust. This document will usually contain:
The income and capital beneficiaries of the trust
Details of annual trustee meetings
How the annual financial statements are to be drafted
Distributions to income and capital beneficiaries of the trust
Rules relating to the termination of the trust
Amendments to trust deed clauses
Trustees in office should also have a general understanding of:
The principles relating to accounting and tax applicable to the trust and trust beneficiaries
Whether an aspiring trustee is eligible to be appointed as trustee
What it means for a trustee to apply their discretion as trustee
How to actively take part in trustee meetings
The concept of trusts in the context of South African law.
Sanlam Private Wealth offers training to trustees on all aspects of trusteeship as set out above. To book a trustee training session, or for further information, please contact Stanley Broun on +27 (0)11 778 6648 or firstname.lastname@example.org.
we can assist you with
The formation and registration of trusts, and the provision of independent trusteeships – both local and oﬀshore.
The creation of BEE, charitable, special and Shariah trusts compliant with regulatory and legislative requirements.
The administration of deceased estates in South Africa and abroad.
Advice on complex structures, asset restructuring and bequests in foreign jurisdictions.
Advice on emigration and immigration, foreign earnings and the application of any double taxation agreements.
Updating trust deeds to ensure they’re in line with the latest changes in the trust environment.
Updating and/or drafting of wills dealing with South African and/or foreign assets.
Advice on the establishment and management of charitable organisations, their tax status and tax deductible donations.
Advice on the potential tax consequences and reporting obligations if you hold a US passport or green card, or if you have children living in the US.
Guidance on the financial implications of life-changing events, such as getting married, divorce or the birth of a child.
Sanlam Private Wealth (Pty) Ltd, registration number 2000/023234/07, is a licensed Financial Services Provider (FSP 37473), a registered Credit Provider (NCRCP1867) and a member of the Johannesburg Stock Exchange (‘SPW’).
All reasonable steps have been taken to ensure that the information on this website is accurate. The information does not constitute financial advice as contemplated in terms of FAIS. Professional financial advice should always be sought before making an investment decision.
Participation in Sanlam Private Wealth Portfolios is a medium to long-term investment. The value of portfolios is subject to fluctuation and past performance is not a guide to future performance. Calculations are based on a lump sum investment with gross income reinvested on the ex-dividend date. The net of fee calculation assumes a 1.15% annual management charge and total trading costs of 1% (both inclusive of VAT) on the actual portfolio turnover. Actual investment performance will differ based on the fees applicable, the actual investment date and the date of reinvestment of income. A schedule of fees and maximum commissions is available upon request.
COLLECTIVE INVESTMENT SCHEMES
The Sanlam Group is a full member of the Association for Savings and Investment SA. Collective investment schemes are generally medium to long-term investments. Past performance is not a guide to future performance, and the value of investments / units / unit trusts may go down as well as up. A schedule of fees and charges and maximum commissions is available on request from the manager, Sanlam Collective Investments (RF) Pty Ltd, a registered and approved manager in collective investment schemes in securities (‘Manager’).
Collective investments are traded at ruling prices and can engage in borrowing and scrip lending. The manager does not provide any guarantee either with respect to the capital or the return of a portfolio. Collective investments are calculated on a net asset value basis, which is the total market value of all assets in a portfolio including any income accruals and less any deductible expenses such as audit fees, brokerage and service fees. Actual investment performance of a portfolio and an investor will differ depending on the initial fees applicable, the actual investment date, date of reinvestment of income and dividend withholding tax. Forward pricing is used.
The performance of portfolios depend on the underlying assets and variable market factors. Performance is based on NAV to NAV calculations with income reinvestments done on the ex-dividend date. Portfolios may invest in other unit trusts which levy their own fees and may result is a higher fee structure for Sanlam Private Wealth’s portfolios.
All portfolio options presented are approved collective investment schemes in terms of Collective Investment Schemes Control Act, No. 45 of 2002. Funds may from time to time invest in foreign countries and may have risks regarding liquidity, the repatriation of funds, political and macroeconomic situations, foreign exchange, tax, settlement, and the availability of information. The manager may close any portfolio to new investors in order to ensure efficient management according to applicable mandates.
The management of portfolios may be outsourced to financial services providers authorised in terms of FAIS.
TREATING CUSTOMERS FAIRLY (TCF)
As a business, Sanlam Private Wealth is committed to the principles of TCF, practicing a specific business philosophy that is based on client-centricity and treating customers fairly. Clients can be confident that TCF is central to what Sanlam Private Wealth does and can be reassured that Sanlam Private Wealth has a holistic wealth management product offering that is tailored to clients’ needs, and service that is of a professional standard.