May 17, 2021
Register a trust – 10 documents you need
How to register a trust – the procedures and costs involved
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. This may be done for various reasons. It is often to safeguard property for minor children and sometimes to mitigate inheritance tax liability. This article explains how trusts are registered and administered.
Types of trust
There are two types of trust: inter-vivos trusts and testamentary trusts. The administration of trusts is governed by the provisions of the Trust Property Control Act, Act 57/1988. An inter-vivos trust (or living trust) is a trust created between living persons, while a testamentary trust (trust mortis causa or will trust) is created in the will of a deceased person (“the testator”) and comes into existence on the death of the testator.
An inter-vivos trust is created by a “donor” or “founder”, who can also be a trustee, through a Trust Deed, and must be registered with the Master of the High Court in whose area of jurisdiction the trust assets are situated. The Master of the High Court is an appointed official whose role is to execute various functions including the administration of deceased and insolvent estates and the supervision of trusts. An inter-vivos trust is only valid once the Master issues Letters of Authority to the nominated trustee(s).
Testamentary trusts are generally used for estate planning purposes to protect the rights or assets of minors and/or children with special needs.
Duties of trustees
Trustees have statutory, common law and fiduciary responsibilities to look after the trust assets for and on behalf of the beneficiaries of the trust.
Common law responsibilities include:
- Acting within the scope of authority in terms of the Trust Deed
- Identifying the beneficiaries of the trust
- Ensuring the required number of trustees are in place
- Acting unanimously with the other trustees
- Making proper distributions to identified beneficiaries
- Holding regular meetings and keep proper records of meetings
- Keeping proper accounting records and preparing financial statements and tax returns
- Complying with all applicable legislation
- Implementing proper systems of internal control
- Investing productively, wisely and in accordance with sound principles
- Preserving the trust property and keeping it free from burdens such as mortgages, pledges and liens
Statutory duties include:
- Acting with care, diligence and skill
- Lodging the trust instrument with the Master
- Providing the Master with security/exemption from security
- Obtaining written authorisation to act as trustee
- Opening a separate bank account for the trust
- Taking control of the trust assets and keeping these clearly separate from personal property
- Keeping proper records and accounts of administration
Fiduciary duties include:
- Exercising powers In good faith, acting independently and objectively
- Avoiding conflicts between personal interests and those of the beneficiaries
- Acting exclusively in the best interests of all trust beneficiaries
- Fulfilling their duties impartially and in good faith
- Not making a profit (directly/indirectly) from the trust administration
Documents required to register an inter-vivos trust
A trust is a complex legal structure and as such requires considerable documentation. The following documents must be lodged with the Master before an inter-vivos trust can be established.
- Original trust deed or notarial certified copy of it (usually filed in duplicate)
- Proof of payment of the applicable fee (currently R100) to the Department of Justice and Constitutional Development)
- A completed Trust Registration and Amendments Form (J401) (this contains details of the name of the trust, where the trust assets are situated, the possible duration of the trust, the number of trustees, the source of trust funds, whether an annual audit is required or not, contact details of all the trustees, details of the founder/settlor and details of the trust auditor)
- Beneficiary Declaration (J450 form), which lists the beneficiary’s/beneficiaries’ details
- Completed Acceptance of Trusteeship forms (J417)
- Acceptance of Auditor’s Application (J405) form (if applicable)
- Certified copies of the identity documents of all trustees
- Certified copies of the identity documents of all beneficiaries
- A bond of security by the trustees – form J344 PDF (if required by the Master) or proof of exemption from having to furnish security to the Master (this exemption is usually expressly contained in the Trust Deed)
- If the inter-vivos trust is a family trust, a sworn affidavit by an independent trustee is needed
On receipt of these documents, the Master will issue the nominated trustees with Letters of Authority to administer the trust.
Under normal circumstances, Letters of Authority are issued by the Master within two to three weeks of lodgement of the above documents. Currently, it takes at least three months for the Letters to be issued.
The costs of registration of an inter-vivos trust range between R6 000 and R12 000.
Getting help with your trust
Setting up a trust is a legal matter. You are well advised to consult an attorney with experience of trusts and estate planning. They will make sure you have all the documents you need and follow the process correctly, ultimately saving you time and giving you peace of mind. Cape Town law firm Simon Dippenaar and Associates can help you draft the trust deed and register and administer the trust. Give attorney Simon Dippenaar a call on 086 099 146 or email firstname.lastname@example.org.
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.