South Africa Is Rewriting Its Trust Law: Here’s What Changes and What it Means for Trustees

Why the Law Is Being Rewritten

The short answer is accountability and transparency, with money laundering an important part of the story rather than the whole of it.

The Department of Justice sets out a broader list of problems the Bill is meant to address: trustees evading accountability, insufficient protection for beneficiaries, inadequate oversight by the Master, a lack of transparency in how trust property is managed and controlled, and the misuse of trusts generally. Anti-money-laundering reform sits alongside those concerns, not above them.

The financial crime dimension is nonetheless real. South Africa was placed on the Financial Action Task Force grey list in 2023, partly because trusts were identified as an opaque structure with weak visibility of who ultimately benefits. The 2023 amendments to the Trust Property Control Act were, in effect, a rapid patch — beneficial ownership registers bolted onto a statute that had never contemplated them. South Africa exited the grey list on 24 October 2025, but that did not end the reform process. The country remains within the next assessment cycle, and the underlying architecture was never rebuilt.

This Bill is the attempt to rebuild it. It also addresses something the FATF conversation tends to overlook: the 1988 Act gave the Master limited practical leverage over trustees who simply ignored their obligations. In effect, a compliance regime with no meaningful enforcement mechanism short of a court application. The Bill proposes to close that gap with compliance notices, administrative fines and a schedule of criminal offences.

What Would Change for Trustees

Much of the Bill codifies what careful trustees already do. The duty of care becomes statutory, and it is calibrated to the individual: the standard proposed is the care, diligence and skill reasonably expected of a person managing another’s affairs, adjusted upward where the trustee holds special knowledge or professional expertise. In practice, a professional trustee who holds themselves out as having specialist expertise can reasonably expect their conduct to be judged against that expertise.

Investment gets its own clause, framed as a prudent investor standard requiring consideration of the trust’s objectives, diversification, liquidity, cost and tax consequences. Defensible practice — but, under the Bill, a testable one.

The table below sets out the position under the current Act against what the Bill proposes.

The compliance calendar becomes a real thing

If enacted substantially in its current form, the annual compliance rhythm of a family trust would change materially. Take a typical family discretionary trust holding a holiday property and a share portfolio. Financial statements would need to be prepared unless the trust falls below the exemption thresholds. An annual return would be due within six months of the authorisation anniversary. The beneficial ownership register would need to be maintained, lodged and refreshed within ten days of any change — a beneficiary born, a trustee resigning, a founder dying.

Ten days is short. It is the kind of deadline that is straightforward to meet with a system in place and very difficult to meet without one.

What the exemptions would and would not cover

Two exemptions appear in the Bill, and neither carries a number yet.

The financial statements exemption is automatic and requires no application, but it is drawn as an activity test rather than a size test: a trust would be exempt for a year if the aggregate inflows and outflows of trust property for that year fall below thresholds the Minister determines by notice in the Gazette. That is a measure of what moved, not what the trust is worth. A trust holding R15 million of property and shares could fall below the line in a year when nothing happened, while a far smaller trust that sold a holding, received rental income or made a distribution to a beneficiary could exceed it. On any sensible reading, the realistic beneficiaries of this exemption are genuinely dormant trusts rather than merely modest ones.

The beneficial ownership exemption works differently again. It is not automatic and not assessed trust by trust. Following a national money-laundering and terrorist-financing risk assessment, and after consulting the Minister of Finance and the Financial Intelligence Centre, the Minister could determine categories of trust presenting low risk and exempt them, possibly subject to conditions. A trust would qualify by falling inside a category that has yet to be defined.

Two points are worth holding onto. The annual return has no exemption at all — a trust excused from financial statements would still file one. And the Bill sets out no requirement for those financial statements to be audited or independently reviewed, which is a notable gap in a draft otherwise built around trustee accountability, and a fair subject for a public comment submission.

Who may serve as a trustee

Two proposals deserve attention from anyone sitting on a family trust board.

First, a sole trustee would not be permitted to be the sole beneficiary. That has long been the position in principle; the Bill states it plainly.

Second, and more consequential: the Master could appoint an independent trustee even where the deed makes no provision for one, where every trustee is also a beneficiary, every trustee is related to the others, and the trust transacts with third parties. Read alongside the two-degrees definition of “related”, that would capture a large proportion of South African family trusts — parents and adult children serving as both trustees and beneficiaries, owning property or running a business through the trust.

The rationale is the familiar separation-of-control-and-enjoyment principle that courts have applied for years. The change is that it would stop being an argument and become an administrative decision. Trusts that meet these criteria should review their trustee composition now and consider whether the board remains appropriate should the provision survive into the final legislation — which is a different exercise from appointing an independent trustee today on the strength of a draft.

Vulnerable beneficiaries and community property

The Bill would restrict the use of trusts to hold damages awards for children or people unable to manage their own affairs — typically motor vehicle accident and medical negligence awards. Such a trust would require a curator ad litem appointed during the proceedings who reported to the court recommending a trust, with the court satisfied that the trust instrument is appropriate and contains nothing prejudicial to the beneficiary.

The provision appears aimed at concerns around fee extraction and poor administration in some damages trusts. The cost is process and delay for families who simply need the money managed properly.

A related restriction sits alongside it: the Bill proposes that a trust may not be created to administer property received by a community from the State, whether under an agreement or under any law. The Department has linked the proposal to concerns around mismanagement and misappropriation in the land reform context. It will not affect most private clients, but it forms part of the same protective thread running through the draft.

Risk and Structural Considerations

The Bill would shift risk onto the individual trustee in a way the current Act does not.

Administrative fines become a personal liability

A fine imposed under the Bill would be payable by the trustee, from the trustee’s own resources, and could not be recovered from trust property. The trust cannot indemnify its way out. For professional trustees, and for family members who accepted office as a favour, this changes the calculation of what the role actually costs.

Criminal exposure attaches to beneficial ownership failures

Intentionally keeping, lodging or providing incorrect beneficial ownership information would carry a fine of up to R10 million or imprisonment of up to five years. So would supplying false beneficial ownership information to a trustee — which places a beneficiary who misrepresents their position in the frame alongside the trustee. Magistrates’ courts would have jurisdiction to impose these penalties.

Dormant trusts become a liability

Many South African trusts were established a decade or more ago, hold a single asset, and have not met formally since. Under the current Act, that inertia is largely invisible. Under the Bill, it would generate a missing annual return, absent financial statements and a stale beneficial ownership register — three compliance notices waiting to happen.

Cost rises for every trust

Financial statements, an annual return, register maintenance and possibly an independent trustee’s fee are not free. For a trust holding one property and generating no meaningful income, the honest question is whether the structure still earns its keep.

Foreign trustees need authorisation

A trustee resident outside South Africa who administers South African trust property would require authorisation from the Master. Families with emigrated children serving as trustees should look at this early.

Does the Trust Still Earn Its Place?

Most commentary on the Bill will treat it as a compliance problem: here are the new rules, here is how to satisfy them. That is useful as far as it goes, but it is the second question, not the first.

The first question is whether the trust still performs a useful function in the family’s broader financial, tax, succession and estate plan — and whether that benefit justifies the cost and complexity of maintaining it properly. The right response to rising compliance cost is not automatically to dismantle a trust. Nor is it to preserve one simply because it already exists and unwinding it feels like effort. Structures should justify their existence, not merely survive because somebody created them twenty years ago and nobody has revisited the decision since.

Plenty of trusts pass that test comfortably. A trust holding a growing asset outside a founder’s estate, providing for a beneficiary who cannot manage their own affairs, holding a business interest subject to a buy-and-sell arrangement, or carrying wealth across generations with intent — these have a clear reason to exist, and the additional administration is a manageable cost of doing something worthwhile. This is the heart of proper family wealth planning.

Others do not. A trust created because a seminar in 2004 suggested it, holding a coastal flat that has never generated income, with trustees who last met when the deed was signed, is not an estate planning structure. It is an administrative obligation wearing the costume of one. The Bill would make that costume considerably more expensive.

Winding a trust up carries its own tax and estate consequences — capital gains on distribution of assets, transfer duty considerations, the loss of estate-duty positioning built up over years. So the decision belongs inside a full review rather than being taken in isolation because compliance has become tiresome. But it should at least be a live question, and for many families it has not been one for a very long time.

What to Do Now

The Bill is a draft. Its wording will change before it reaches Parliament, and commencement is some way off. That is not a reason to wait, because almost everything worth doing now is worth doing regardless of the final text.

1. Establish where each trust actually stands. When were financial statements last prepared? When did the trustees last resolve anything in writing? Is the beneficial ownership register current, or was it filed once in 2023 and never touched?
2. Revisit the purpose before the paperwork. Why does this trust exist? Does that reason still hold? Everything else follows from the answer.
3. Map the trustee board against the “related” test. If every trustee is also a beneficiary and everyone is family, the independent trustee provision is worth understanding now — not necessarily acting on, but understanding.
4. Check every trustee against the proposed disqualification list. Insolvency, a delinquency order, a dishonesty conviction — any of these would disqualify a trustee under the Bill.
5. Fix the record-keeping architecture. A retention obligation running five years past a trustee’s tenure means records cannot live in one person’s filing cabinet or inbox.
6. Comment, if the Bill affects you. Submissions close on 11 September 2026 with the Department of Justice and Constitutional Development. Industry bodies will file; individual trustees are entitled to as well.