What happens when a trustee needs to be removed?
A trust is a legal arrangement to protect assets and ensure they are distributed according to the wishes of the donor/founder (the person or entity who owns the assets). The donor gives another party, known as the trustee, the right to hold title to the assets for the benefit of a third party. Trusts are used for various reasons, often to safeguard property for minor children and sometimes to mitigate inheritance tax liability. But what happens when a trustee does not perform their duties adequately? Is it possible to remove a trustee from a trust in South African law? Yes, it is.
Interests of the trust
The removal of a trustee from a trust is a legal remedy designed to protect the proper administration of the trust and the interests of its beneficiaries. In South Africa, this process is primarily governed by the Trust Property Control Act 57 of 1988, which empowers the High Court to remove a trustee on application if removal is “in the interests of the trust and its beneficiaries.”
Protecting the trust
Unlike disciplinary proceedings, the removal of a trustee is not punitive but protective. The court’s main concern is the efficient, honest and impartial administration of the trust. A trustee can be removed for various reasons: incapacity, dishonesty, breach of fiduciary duty, conflict of interest, or even where interpersonal conflict between trustees renders the trust unmanageable.
Examples
In Land and Agricultural Bank of South Africa v Parker and Others (2005), the court reaffirmed the fiduciary nature of trusteeship. Trustees must act independently, honestly and in the interests of beneficiaries. The court emphasised that domination of one trustee by another, or by external forces, compromises the independence required for proper administration.
Similarly, in Gowar v Gowar (2016), the Supreme Court of Appeal confirmed that even where no misconduct has been proven, removal may be justified where the relationship between co-trustees has broken down to the extent that the trust’s administration is impeded. The test is not whether the trustee has acted unlawfully but whether their continued presence is detrimental to the trust’s functioning.
Duties of trustees
Trust deeds may contain provisions for removal, but these must be read in light of the overarching authority of the courts under the Trust Property Control Act. The Master of the High Court, who supervises the appointment of trustees, cannot remove a trustee unless permitted by the trust deed. Removal thus usually requires a formal court application, supported by substantial evidence.
Practically, trustees must understand that actions such as failure to keep proper records, neglecting to act jointly where required, or failing to consult beneficiaries can all create grounds for removal. Courts will also consider whether other remedies, such as mediation or administrative correction, have been explored.
Ultimately, the purpose of removal is to uphold the trust’s objectives and protect the beneficiaries from potential harm. It is a remedy of last resort, used only where the integrity or proper administration of the trust is clearly at risk. As such, it is both a legal and pragmatic safeguard for South Africa’s robust system of trust law.
Getting help with your trust
When setting up a trust, it is critical to choose the trustees wisely. They have a legal and moral duty of care to the beneficiaries of the trust and to the donor. If you are considering setting up a trust or have any concerns about the running of an existing trust, consult an attorney with experience of trusts and estate planning. Cape Town law firm Simon Dippenaar and Associates can help you draft a trust deed and register a trust. If you have concerns about a trustee of an existing trust, we will assess the situation and determine if removal is appropriate. Give attorney Simon Dippenaar a call on 086 099 146 or email sdippenaar@sdlaw.co.za.
Further reading:
- Trusts – frequently asked questions
- 7 advantages of holding assets in a trust
- Register a trust – 10 documents you need
- Trusts and Divorce
SD Law
The information on this website is provided to assist the reader with a general understanding of the law. While we believe the information to be factually accurate, and have taken care in our preparation of these pages, these articles cannot and do not take individual circumstances into account and are not a substitute for personal legal advice. If you have a legal matter that concerns you, please consult a qualified attorney. Simon Dippenaar & Associates takes no responsibility for any action you may take as a result of reading the information contained herein (or the consequences thereof), in the absence of professional legal advice.