The trust, in whichever form it’s moulded in, is a vital instrument for estate planning.
A trust is defined in the Trust Property Control Act as an arrangement through which ownership of the property of one person or a group, is by virtue of a trust instrument entrusted to another person(s), the trustee, to be administered according to the trust instrument for the benefit of the beneficiaries indicated in the trust instrument.
CARE, DILIGENCE AND SKILL
A trustee must, in the performance of his duties, act with due care, diligence and skill. This is reasonably expected of a person who manages the affairs of another. This is not negotiable.
FIDUCIARY DUTIES OF A TRUSTEE*
The fiduciary relationship entails that a trustee must, in relation to the trust the beneficiaries and the other trustees, act honestly and in good faith.
A trustee must act in an impartial manner at all times. The needs of one beneficiary can never take priority of the needs of another beneficiary. This does not mean, however, a trustee cannot exercise his discretion and select one option over another; it often means that a trustee cannot operate a trust in such a way that one beneficiary enjoys financial gains while another is left hanging.
It is important for trustees to remember that the trust assets belong to the trust and not the trustees. trustees must ensure that accurate accounting records are kept, and be in a position to explain the Trust’s transactions and financial position to the Master of the High Court upon request. The trustees need to ensure that the trust has an operating bank account, and that the trust is registered with SARS for income tax purposes.
MEETINGS BY TRUSTEES
The trustees should convene at least one trustee meeting per annum; and ensure that minutes of all meetings are kept.
SUMMARY OF TRUSTEE DUTIES**
– To act in good faith;
– Not to make a profit our of the trust;
– Not to place himself in a position where his duty and interest may conflict;
– Not to act for his own benefit or that of a third party unless authorised to do so;
– Not to misuse confidential information;
– Lodge the Trust Deed with the Master;
– Ensure that Letters of Authority is issued;
– Take control and possession of the trust assets / property;
– Obtain the trust instrument and study it (this is either the Will or Trust Deed – it all depends on the type of trust created)
– Keep all necessary documentation in safe custody;
– Keep trust assets separate from private assets.
The above is a brief overview od the many duties that a trustee must follow. Trustees, generally, have a greater standard of care than others. Therefore, they should make it their business to ensure that they are provided with all necessary information and documentation prior to entering into any transactions.