A trustee in South Africa is a person appointed to manage and administer trust assets on behalf of the trust’s beneficiaries. Trustees operate under a fiduciary duty — one of the highest legal obligations recognised in our law — and are bound by both the Trust Property Control Act 57 of 1988 (TPCA) and the trust deed itself.
The role is not ceremonial. It carries real legal accountability, ongoing administrative obligations, and personal liability for breach of duty. Yet many South Africans accept a trusteeship — or appoint family members as trustees — without fully understanding what the position requires.
The key responsibilities of a trustee include:
- Acting in the best interests of the beneficiaries at all times
- Managing trust assets with the care, diligence, and skill required by section 9(1) of the TPCA
- Maintaining proper financial records and filing annual tax returns
- Acting independently — not as an instrument of the founder or dominant beneficiary
- Ensuring the trust is properly administered to avoid sham trust findings
This article explores each of these dimensions in depth. For broader context, see our guide to estate planning in South Africa.
Key Definitions
Trustee
A person authorised by the Master of the High Court to administer and control property held in a trust for the benefit of the trust’s beneficiaries. No person may act as trustee without valid Letters of Authority issued by the Master (section 6(1) of the TPCA).
Fiduciary duty
A legal obligation to act in the best interests of another party — in this context, the beneficiaries of the trust. Requires honesty, loyalty, and the avoidance of conflicts of interest.
Inter vivos trust
A trust established during the founder’s lifetime. The most common form of family trust used for estate planning and asset protection in South Africa.
Testamentary trust
A trust created through a Last Will and Testament, which comes into effect upon the founder’s death. Commonly used to protect assets for minor children.
Independent trustee
A trustee who is not a beneficiary and has no family or close personal relationship with any other trustee, beneficiary, or the founder. Required for all new family business trusts since a 2017 Chief Master’s Directive.
Sham trust
A trust courts have found to lack the fundamental legal character of a trust — typically because the founder retained effective control. Courts may disregard the trust’s separate legal identity and treat its assets as belonging to the founder personally.
Alter ego trust
A trust that, while validly constituted, was operated so extensively as one person’s personal instrument that courts may pierce its veneer and hold that individual personally accountable for its obligations.
Letters of Authority
The formal document issued by the Master of the High Court authorising a person to act as trustee. Trustees may not act without this document.
What Does the Law Actually Require of a Trustee?
The Standard of Care Under Section 9
The cornerstone of a trustee’s legal obligation is found in section 9(1) of the TPCA, which requires that a trustee act with the care, diligence, and skill which can reasonably be expected of a person who manages the affairs of another.
This is an objective standard. The law measures conduct against a reasonable, prudent benchmark regardless of whether you are a retired schoolteacher or a seasoned attorney. Critically, section 9(2) makes any provision in a trust deed that purports to exempt a trustee from liability for breach of duty void and unenforceable.
In practical terms:
- Ignorance of the trust deed is not a defence
- Blindly following the instructions of the founder is a breach of duty
- Failing to enquire into the trust’s financial position constitutes negligence
- Passively signing documents without applying your mind is not acceptable
The Duty to Act Jointly
Trustees must act jointly unless the trust deed expressly provides otherwise. Decisions affecting the trust — distributions, investments, disposal of assets — require the agreement of all trustees. This was affirmed in Land and Agricultural Bank of South Africa v Parker and Others 2005 (2) SA 77 (SCA), where the Supreme Court of Appeal confirmed that a sub-minimum of trustees cannot validly bind a trust.
The Duty of Independent Judgment
A persistent failure pattern in South African family trusts involves trustees who defer entirely to the founder. The founder retains practical control, makes all decisions, and the other trustees simply ratify. SARS and the courts have consistently treated this as problematic.
Fiduciary Duties in Full
| Duty | What It Means in Practice |
|---|---|
| Loyalty | Always act in the interests of the beneficiaries — never for personal gain |
| Impartiality | Treat beneficiaries fairly; do not favour one at the expense of another |
| Active supervision | Proactively monitor the trust’s assets; do not wait for problems to arise |
| No conflict of interest | Avoid positions where personal interests conflict with fiduciary duty |
| Confidentiality | Protect sensitive beneficiary information |
| Accounting | Provide accurate accounts to beneficiaries on request |
| Compliance with the deed | Act within the powers and limitations set out in the trust instrument |
The Administrative Reality of Being a Trustee
What Proper Trust Administration Looks Like
In 2022 and 2023, significant amendments to the TPCA — driven largely by South Africa’s placement on the FATF grey list — materially increased compliance requirements for all trusts.
Annual tax compliance:
- Filing an ITR12T annually — this applies even to trusts with no economic activity
- Submitting IT3(t) returns to SARS by 30 September each year
Beneficial ownership register:
- Since 1 April 2023, all trustees must establish, maintain, and lodge a register of beneficial owners with the Master of the High Court
- Accessible to SARS, the NPA, and the Financial Intelligence Centre
Financial records:
- Proper books of account must be maintained
- Annual financial statements are required and strongly recommended
- Trust records must be kept for at least five years after the trust terminates
Trustee meetings:
- Formal resolutions should be passed for all material trust decisions
- Minutes should be kept and maintained
Banking:
- Trust funds must be held in a separate, dedicated trust bank account — never commingled with the trustee’s personal or business funds
The penalty for non-compliance with the TPCA’s beneficial ownership requirements is a fine of up to R10 million and/or imprisonment of up to five years.
Common Administrative Failures
- No formal trustee meetings or resolutions
- Trust funds flowing through the founder’s personal account
- No annual financial statements
- Trustee decisions made unilaterally by the founder
- Trust deed provisions ignored or not followed
- The trust owning no assets of its own — operating entirely on paper
The Independent Trustee: Why It Matters More Than Most Families Realise
The Requirement
Following the Parker judgment, the Chief Master issued a Directive in March 2017 requiring that all new family business trusts include an independent trustee as a condition of registration. An independent trustee must not be a beneficiary, and must have no family relationship — by blood, marriage, or close association — with any other trustee, beneficiary, or the founder.
The Role of the Independent Trustee
- To act as an objective check on decisions that might otherwise favour the founder
- To ensure trustees genuinely apply their minds before approving major decisions
- To provide an external perspective on risk, governance, and compliance
- To signal to SARS, creditors, and courts that the trust is operated as a genuine independent structure
- To ensure the trust deed is being followed and not informally overridden
Who Should Be Your Independent Trustee?
The role is ideally filled by a professional with genuine expertise — an attorney, accountant, fiduciary specialist, or suitably qualified financial planner. The appointment should be made on the basis of competence, not loyalty or convenience.
An independent trustee who simply co-signs documents without engaging provides no real protection — and may in practice make the trust more vulnerable to sham trust findings, because their presence creates the appearance of governance that does not actually exist.
A credible independent trustee will:
- Insist on receiving all material documents before resolutions are signed
- Attend trustee meetings or receive proper notice and minutes
- Maintain their own file of trust records
- Raise concerns if the trust’s affairs are being conflated with the founder’s
- Be remunerated appropriately for their time and accountability
Sham Trusts and Alter Ego Trusts: What the Courts Have Said
The Legal Framework
A sham trust arises where the parties never actually intended to create a genuine trust relationship. The founder retained full control and the assets were never truly alienated. Courts may disregard the trust and treat its assets as belonging to the founder personally.
An alter ego trust is one where the trust was validly constituted, but operated so completely as the personal instrument of one person that courts are prepared to pierce its veneer and hold that individual accountable for its obligations.
Key Cases
Land and Agricultural Bank of South Africa v Parker and Others 2005 (2) SA 77 (SCA): Cameron JA observed that where the core idea of a trust — the separation of control from enjoyment — is lacking, the trust cannot serve as a shield against personal liability. The court strongly recommended inclusion of an independent outsider trustee where all trustees are also beneficiaries.
Badenhorst v Badenhorst 2006 (2) SA 255 (SCA): The court found Mr Badenhorst had full de facto control of the family trust. A redistribution order was granted. A standing warning that effective control over trust assets may have material consequences in divorce and insolvency proceedings.
MJ K v II K 2023 (2) SA 158 (SCA): The SCA noted that the husband had appointed his personal friend as trustee — a trustee in name only. A nominal independent trustee who does not function independently provides no real protection.
What Makes a Trust Vulnerable?
| Risk Factor | Why It Matters |
|---|---|
| Founder retains de facto control | Undermines the core idea of separation between control and benefit |
| Trustees sign in blank without engaging | Evidence that the trust is a facade rather than a genuine structure |
| Trust funds mixed with founder’s personal funds | Suggests no genuine separate legal entity exists |
| No formal meetings or resolutions | No evidence of genuine trustee deliberation |
| Loans from founder never repaid | May indicate the trust is simply the founder’s personal balance sheet |
| Section 7C interest-free loans | Attracts donations tax if interest not charged at the official SARS rate |
| SARS ignores trust structure | Income may be attributed to the founder under the conduit principle |
Appointing a Trustee: How to Think About It
For an Inter Vivos Trust
A typical family trust might include:
- The founder (or spouse): Brings knowledge of family circumstances. Should be balanced by independent perspectives.
- An adult family member or trusted friend: Must understand they are accepting genuine legal accountability — not a nominal role.
- An independent professional trustee: Required for new trusts; strongly recommended for all trusts.
Before appointing — or accepting — a trusteeship, consider honestly:
- Do they understand what the role actually requires?
- Will they be willing to push back on decisions they disagree with?
- Do they have the time to attend meetings and engage meaningfully?
- Do they have conflicts of interest that could compromise independence?
- Are they financially stable? Personal insolvency disqualifies under section 20(1) of the TPCA.
For a Testamentary Trust
A testamentary trust comes into existence at death, often for the benefit of minor children. The trustee appointed in your will carries the same fiduciary obligations as any inter vivos trustee. Consider:
- Is this person financially responsible and sufficiently knowledgeable?
- Are they geographically accessible?
- What happens if they predecease you or become incapacitated?
- Should a professional fiduciary serve alongside family members?
- Does your will contain clear guidance on investment mandate and distributions?
Trustee Succession
Trusts are often intended to outlast their founders by decades. Trustee succession must be addressed in the trust deed. The TPCA grants the Master default power to appoint a replacement where the deed is silent, but proper planning avoids this.
A Note on Remuneration
Independent professional trustees typically charge on a time-and-attendance basis or a fixed annual retainer. This cost is modest relative to the protection a properly functioning trustee panel provides — and should be factored into the structuring decision from the outset.
| Trustee Quality | Why It Matters |
|---|---|
| Genuine independence from founder and beneficiaries | Required by law for new family business trusts; essential for structural integrity |
| Willingness to apply their mind and push back | A passive co-signatory provides no real governance benefit |
| Relevant professional expertise | Legal, accounting, or financial planning knowledge aids sound decision-making |
| Availability and accessibility | Meetings, resolutions, and records require ongoing engagement |
| Financial stability | Personal insolvency disqualifies a trustee under section 20(1) of the TPCA |
| Long-term commitment | Trusts may run for decades; continuity of governance matters |
Frequently Asked Questions
What is the main legal duty of a trustee in South Africa?
A trustee's primary duty is to act with the care, diligence, and skill expected of a person managing another's affairs under section 9(1) of the Trust Property Control Act. This objective standard applies regardless of experience or background. Trustees must always act in beneficiaries' interests and in accordance with the trust deed.
Is an independent trustee legally required for a South African family trust?
Since a Chief Master's Directive in March 2017, all new family business trusts must include a truly independent trustee — one who is not a beneficiary and has no family or close personal relationship with other trustees, beneficiaries, or the founder. The practical and legal case for including one applies to all trusts, not only new ones.
What happens if a trust is found to be a sham trust in South Africa?
Courts may disregard the trust's separate legal identity and treat its assets as personally belonging to the founder. This exposes those assets to creditor claims in insolvency, inclusion in the founder's estate for estate duty purposes, and potential redistribution in divorce proceedings. SARS may also attribute trust income directly to the founder.
Can a trustee be personally liable for trust losses?
Yes. A trustee who breaches fiduciary duties or acts negligently can be held personally liable for losses suffered by the trust. The TPCA explicitly prohibits trust deeds from exempting trustees from liability for breach of duty — making proper administration and independent judgment essential rather than optional.
What new reporting requirements do trustees face in South Africa?
Since April 2023, trustees must maintain and lodge a register of beneficial owners with the Master of the High Court. SARS requires annual IT3(t) submissions disclosing income vested in beneficiaries, and all trusts must file an annual ITR12T regardless of economic activity. Non-compliance can result in fines of up to R10 million or imprisonment.
Trustee Selection Is a Structural Decision, Not a Formality
A trust is a powerful and legitimate planning tool — but its integrity rests entirely on the quality of its trustees and the rigour of its administration. The legal framework is clear: trustees carry genuine fiduciary accountability, the standard of care is objective, and courts have shown consistent willingness to disregard trust structures operated as personal instruments.
The patterns that attract scrutiny are well documented. Founders who retain de facto control, trustees who sign without engaging, funds that flow through personal accounts, and annual obligations quietly ignored — these are structural failures that undermine the fundamental purpose of the trust form.
Choosing a trustee — or accepting a trusteeship — deserves the same careful thought as any other significant legal appointment. The right panel, including a competent and genuinely independent professional, is the governance foundation on which the trust’s legal integrity rests.
For those navigating this as part of broader estate planning in South Africa, trustee selection is typically one of the most consequential decisions in the process. It also tends to be one of the most frequently deferred. It deserves to be addressed first.
The administration and governance of family trusts is a core area of Henceforward’s fiduciary practice. If you would like to review your current trust structure or discuss trustee appointments, we are happy to assist.
Trustee appointments and trust governance reviews are part of Henceforward’s fiduciary practice. If you would like to review your current structure — whether a new trust or one that has been running for years — we are happy to work through it with you.
This article is for informational purposes only and does not constitute financial advice. Henceforward (Pty) Limited is an authorised representative of Graviton Wealth Management (FSP 8772). Tax figures referenced are indicative — verify current rates and thresholds at sars.gov.za before making any decisions. Exchange control allowances are subject to SARB policy. Consult a qualified financial or tax advisor for advice specific to your circumstances.