Trust Law in South Africa

Book Review: Trust Law in South Africa

By Walter D. Geach
Editor: Louise du Toit (553 pages)
Juta & Co (Pty) Ltd www.jutalaw.co.za

Trust Law in South Africa

“Where large sums of money are concerned, it is advisable to trust nobody.”
– Agatha Christie (1891-1976)

The law relating to trusts in South Africa is one of those areas where the common law still plays a major role. Of course, specific sections of a statute can change the common law, provided the statute is expressed in a clear and unambiguous manner. The terms and clauses of a trust deed, which is a trust’s “constitutive charter”, are subject to all laws, both statute and common law, as interpreted, applied and developed by decided case law.

The Trust Property Control Act 57 of 1988 is the major legislation dealing with many aspects of the formation and administration of trusts. Other legislation applicable to trusts includes the Income Tax Act, the Companies Act, the Estate Duty Act and the Alienation of Land Act.

It is not surprising that trusts have endured for so long. They can provide a vehicle to regulate assets and tax liability, during or beyond the life of the founder of the trust, to achieve or advance a charitable or other objective, to nominate the beneficiaries both born and as yet unborn, and to stipulate the powers and duties of the trustees appointed and to be appointed to control and administer the trust on behalf of beneficiaries. One hears much about family values. But trusts are frequently used to attempt to deal with the darker side of family relationships – squabbling, bickering, petty jealousies, resentment, and much other “un-family” conduct.

This book comprehensively covers all aspects of the use and administration of trusts in South Africa. It deals extensively with a full range of issues relating to trusts, including the necessary requirements for the formation of a valid trust, the duties of trustees, the rights of beneficiaries, the often contentious amendment of trust deeds and the termination of trusts.

Separate chapters deal with important topics such as the advantages and disadvantages of a trust, the different kinds of trusts, trusts as members of companies and close corporations, and income tax and capital gains tax applicable to trusts.

The text, chapter indexes, footnotes, illustrative examples, and the explanatory tables, for example comparing the relevant aspects of trusts with companies, close corporations and partnerships, are useful, practical and will be welcomed by trustees, settlors of trusts, beneficiaries, legal, insolvency and accounting practitioners, administrators of estates, financial planning advisors, and the office of the Master of the High Court.

Plotting a path through the potential pitfalls of the trust landscape is a lot more difficult than clicking on Uber to take you to your destination. The author drily and correctly observes:

Beneficiaries can sometimes be very difficult or prone to initiating litigation or can constantly be complaining about trustees and their decisions as well as about other beneficiaries and what they have received from a trust. Beneficiaries can get very greedy and ungrateful and regard their interests in a trust as an entitlement even though they personally did not work towards creating or obtaining trust assets or trust income. Sometimes beneficiaries can threaten well-meaning trustees with litigation because they believe that they are being prejudiced by the manner in which the trustees are behaving or making decisions.”

A feature of this volume is the concise summaries of selected topics, a real benefit to the hard-pressed professional seeking quick guidance. Examples include:

  • A check list of steps to follow when contracting with a trust.
  • A synopsis of remedies available to aggrieved beneficiaries.
  • A table of some of the actions of a trustee that would constitute a breach of the trustee’s duty to act with care, diligence and skill.
  • A list explaining some of the most important powers of trustees, with comment and further references.
  • An explanatory schedule summarising the role of the Master’s office and the powers of the Master as provided for in the Trust Property Control Act.
  • Examples of the financial statements and accounting records required for a trust.

The author, Professor Walter Geach CA(SA) BA LLB MCOM FCIS, is Head of the Department of Accounting at the University of the Western Cape and a Fellow of the University of KwaZulu-Natal. His expertise and experience as an author and seminar presenter in company law, financial planning, trusts and taxation is abundantly evident in his on-the-button discussion of the case law and his suggestions about good business practice in the administration of trusts.

Some writers resent the role of those pesky editors, always changing, omitting or fiddling with the writer’s carefully crafted words of wisdom. Not here. The editor, whom the author rightly acknowledges “for her professionalism, invaluable assistance and incredible eye for detail in respect of every aspect of the book”, is Dr. Louise du Toit BA LLB LLM PhD. Publisher Juta is to be commended for harnessing their talents, exhaustive research and dedication in producing this assured and accessible resources in a problematic field of the law that is ever-shifting.

Review by Louis Rood BA LLB (UCT), Consultant at Fairbridges Wertheim Becker Attorneys.

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