My neighbour is a nuisance

It is the third night this week you cannot sleep, because your new neighbour enjoys playing loud rock music late at night. Being kept up till 2 am every morning is affecting your productivity at work. You talk with your neighbour, but he doesn’t seem to see a problem. What now?

Occasional loud noise, if the neighbours have a birthday party, for example, may be considered reasonable. However, if the behaviour of neighbours is repetitively disruptive to the extent that it affects your ability to enjoy your property, then the law supports your concern.

What does the law say about loud neighbours?

There are Noise Control Regulations under the Environment Conservation Act (Act 73 1989). These regulations state that no person (including your neighbour) is allowed to:

Operate or play a radio, television, drum, musical instrument, sound amplifier, loud speaker system or similar device that produces, reproduces or amplifies sound, or allow it to be operated or played so as to cause a noise nuisance.

The regulations also give local authorities (i.e. your municipality) the right to enter premises without prior notice, on condition it’s at a reasonable time of the day. This would be to inspect the premises and take any action if necessary.

What makes your neighbour a nuisance?

The basic question is whether the noise is unreasonable in the circumstances. In a busy city area, for instance, noise pollution is common, but in a residential area life can be expected to be quieter.

Noise is not the only neighbourly “nuisance”. Some other causes of nuisance include:

  1. Bad odours.
  2. Excessive movement of vehicles or people.
  3. Smoke, gas or fumes.

Before reacting to the conduct of your neighbour you should consider the following:

  1. The area affected.
  2. The extent of the disturbance.
  3. The time, duration and frequency of the disturbance.

What can you do?

The first step of any neighbourly dispute should be to approach your neighbour and ask them to stop what’s causing the nuisance, such as telling them to turn down the music. If matters cannot be resolved reasonably and interventions by your local authority or by calling the police produce no results, you should get legal advice on obtaining a court order (interdict), directing the neighbour to stop causing the nuisance.

 Reference:

Anderson, AM. Dodd, A. Roos, MC. 2012. “Everyone’s Guide to South African Law. Third Edition”. Zebra Press.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

Government’s administrative decisions

To safeguard against administrative decisions going wrong, the Promotion of Administrative Justice Act of 2000 (PAJA) gives individuals and legal entities the right to fair, lawful and reasonable administrative action. Furthermore, it gives the important right to obtain reasons for administrative actions.

Administrative action?

Applications for an ID or passport or permit, for example, involve administrative action.

Government departments, the police, and parastatals such as ESKOM all take administrative decisions. PAJA applies when a decision made by an arm of government has an effect on someone’s rights.

What does PAJA do?

PAJA requires that a fair procedure is followed when administrative decisions are taken, and gives the important right to obtain reasons for decisions. Persons affected by decisions that go against them, must also be informed of any internal appeals available to them within the government department or body concerned. As a last resort the person affected can approach a court to review the decision.

The following are grounds for review:

  1. There was no good reason (rational basis) for the decision.
  2. The decision-maker was not authorised by legislation to act or take the decision.
  3. The person who took the decision or action applied the law incorrectly.
  4. The person who took the action did not apply his/her mind to the issue.

What can you do?

If a decision goes against you and you believe there are grounds for getting it set aside, you can request that the particular department provide reasons for the decision. The request should be submitted in writing and within 90 days of the decision or action. If you don’t agree with the reasons, you can request an internal appeal or review. This step must be taken before you can approach a court for review. Government departments will usually have their own internal review or appeal process, which they should inform you about. If you’re still not happy, you can consider an application to court for review. Going to court is expensive, so obtain legal advice on all the available options.

Reference:

Promotion of Administrative Justice Act, 2000 (Act 3 of 2000) Department of Justice and Constitutional Development. Accessed: http://www.justice.gov.za/paja. 09/05/2016.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

Managing the administration of a deceased relative’s estate

The Administration of Estates Act, 1965, determines what must happen with an estate after a person’s death, to ensure that the process is properly managed. This is particularly important if it is a large estate, the assets are varied and there are potential family disputes.

Finding the Will

The first thing to do is to find the Will. If the Will cannot be found among the papers of the deceased, places to call include the deceased’s life insurance company, bank or attorney.

Who is the executor?

An executor is the person appointed to handle the process of settling the estate. The executor will either be nominated in the Will or nominated by the beneficiaries, if there is no nomination in the Will or no Will can be found. The executor is appointed by the Master of the High Court after, inter alia, taking such nominations into consideration. The Master will ultimately decide who will be the executor. If the chosen executor is unfamiliar with the legal procedure, he or she can approach an attorney for help. Once the executor has been determined, the Master will issue a “Letter of Executorship”, which gives the authority to administer the estate.

What must the executor do?

The executor’s responsibilities include:

  • arranging for valuation of the assets of the estate.
  • contacting and dealing with all the beneficiaries.
  • arranging provisional payments for the family’s immediate needs.
  • opening a bank account for the estate and depositing the estates money in it.
  • paying all the necessary estate duties.

The executor needs the Letter of Executorship to carry out these duties.

Eventually, the executor will prepare a liquidation and distribution account, setting out all assets, and debts, and how the assets will be distributed to beneficiaries.  This account must be delivered to the Master, who will check that the executor’s actions reflect the ill of the deceased and that all legal requirements have been fulfilled.

Important things to keep in mind

Whenever any person dies inside or outside the Republic of South Africa leaving any property or a Will, then the death of such a person must be reported to the Master of the High Court by completing a prescribed Death Notice form.

References

The Department of Justice and Constitutional Development: “Reporting the estate of the deceased”. Accessed from: http://www.justice.gov.za/services/report-estate.html/ on 11/05/2016.

Administration of Estates Act 66 of 1965. Accessed from: http://www.justice.gov.za/ on 11/05/2016.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

Cluver Markotter welcomes Sherine as a director and Jana to the team

Jana (left) and Sherine (right)

Sherine Roberts has been promoted to the position of director at Cluver Markotter on 1 February 2017. She joined the firm as a senior associate in the property law department in May 2016. Sherine is a graduate of the University of the Western Cape and has been practising as a conveyancing attorney for eight years.

Jana Bothma joined Cluver Markotter as an associate in January 2017 in the Litigation Department, where she focusses predominantly on eviction proceedings. She studied at Stellenbosch University where she also obtained her Master’s degree in law. Jana completed her articles as a candidate attorney at Stellenbosch University’s Legal Aid Clinic.

We congratulate Sherine on her promotion and welcome Jana to the team of professionals and wish them success with their careers at Cluver Markotter.

Cluver Markotter verwelkom vir Sherine as direkteur en vir Jana tot die span

Sherine Roberts is op 1 Februarie 2017 tot direkteur van Cluver Markotter bevorder. Sy het in Mei 2016 as senior assosiaat in die eiendomsafdeling by Cluver Markotter aangesluit. Sherine is ʼn gegradueerde van die Universiteit van Wes-Kaapland en praktiseer reeds vir agt jaar as aktebesorger.

Jana Bothma het gedurende Januarie 2017 as ʼn assosiaat in die litigasieafdeling, waar sy hoofsaaklik in uitsettingsaangeleenthede spesialiseer, by Cluver Markotter aangesluit. Sy het ʼn Meestersgraad in Regsgeleerdheid by die Universiteit van Stellenbosch verwerf. Jana het haar kandidaat-prokureurskap by die Regshulpkliniek van die Universiteit van Stellenbosch voltooi.

Ons wens Sherine geluk met haar bevordering en verwelkom vir Jana by ons span. Ons wens hulle voorspoed met hul loopbane by Cluver Markotter toe.

Co-owning property with someone else: the ups and downs

What is co-ownership?

Co-ownership involves that two or more people jointly own the same property, for example land. In essence, they legally share ownership without dividing the property into physical portions for their exclusive use. It is thus commonly referred to as co-ownership in undivided shares.

It is possible to agree that owners acquire the property in different shares; for instance, one person owns 70 percent and the other 30 percent of the property. The shares appear from the title deeds registered in the Deeds Office.

The benefits:

In the case of a residential property, the bond repayments and costs of maintaining the home are halved. However, there can be problems, for example when one of the parties involved wants to sell and move, but the other not.

The risks:

If ownership is given to one or more purchasers, without stipulating in what shares they acquire the property, it is legally presumed that they acquired the property in equal shares.

The risks, the benefits and the obligations that flow from the property are shared in proportion to each person’s share of ownership in the property.

The agreement:

If two people own property together in undivided shares it is advisable to enter into an agreement which will regulate their rights and obligations, and also what happens should they decide to go their own separate ways.

The practical difficulties that flow from the rights and duties of co-ownership are captured by the expression communio est mater rixarum or “co-ownership is the mother of disputes”. It is therefore important to agree on the respective rights and obligations, including the following matters:

  1. In what proportion will the property be shared?
  2. Who has the right to occupy the property?
  3. Contributions to the initial payment to acquire the property.
  4. Contributions to the ongoing future costs related to the property.
  5. How the profits or losses will be split, should the property or a share be sold.
  6. The sale of one party’s share must be restricted or regulated.
  7. The right to draw funds out of an access bond over the property.
  8. The consequences of a breakdown of the relationship between the parties.
  9. Death or incapacity of one of the parties.
  10. Dispute resolution procedures.
  11. Termination of the agreement.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

References:

Co-ownership of property: what you need to know


http://www.privateproperty.co.za/advice/property/articles/the-pitfalls-of-property-co-ownership/5046
http://www.jgs.co.za/index.php/property/owning-prop-jointly-the-do-s-and-dont-s

How can a person get married in South Africa?

A person can get married by way of a civil marriage, customary marriage, civil union or religious marriage. A religious marriage is not recognised as a valid marriage, unless a marriage officer officiates, but the spouses in a religious marriage can be protected by law in certain instances.

What are the general requirements for a valid marriage?

  1. Both persons to the marriage must give consent to get married and must be older than 18 years of age.
  2. A person younger than 18 years of age, needs the permission of his/her parent/s or guardian/s to get married.  No person younger than 18 years of age can enter into a civil union.
  3. The marriage must be lawful in terms of rules such as the following:
    1. Persons who are closely related (such as brother or sister, or parent and child) may not get married.
    2. A person may not be party to more than one marriage at a time, except for customary marriages.
  4. Certain formalities must be adhered to, such as that the marriage must be concluded by a marriage officer in the presence of two witnesses.
  5. A marriage must be registered at the Department of Home Affairs.

The difference between marriage in and out of community of property:

  1. MARRIAGE IN COMMUNITY OF PROPERTY:  There is one estate between a husband and a wife.  Property and debts acquired prior to or during the marriage are shared equally in undivided shares (50%).  Both spouses are jointly liable to creditors, with certain exceptions.
  2. MARRIAGE OUT OF COMMUNITY OF PROPERTY WITHOUT THE ACCRUAL SYSTEM:  The spouses have their own estates which contain property and debts acquired prior to and during the marriage (“what is mine is mine and what is yours is yours”).  Each spouse is separately liable to his/her creditors.  Prior to the marriage, an antenuptial contract must be entered into to indicate that the marriage will be out of community of property.
  3. MARRIAGE OUT OF COMMUNITY OF PROPERTY WITH THE ACCRUAL SYSTEM:  This is identical to a “marriage out of community of property”, but the accrual system will be applicable.  The accrual system involves the calculation of how much the larger estate must pay the smaller estate once the marriage comes to an end through death or divorce.  Only property acquired during the marriage can be considered when calculating the accrual.  The accrual system does not automatically apply and must be included in an antenuptial contract.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

References:
https://www.legalwise.co.za/help-yourself/quicklaw-guides/marriages/

Adopting a child in South Africa

Adoption is the legal act of permanently placing a child with a parent or parents other than the child’s birth mother or father.
A legal adoption order ends the parental rights of the birth mother and father and places the parental rights and responsibilities with the adoptive parents.There are 4 phases in the adoption process:

1. Application

In South Africa, the only way in which you can legally adopt a child is by working through an accredited adoption agency, or with the assistance of an adoption social worker, functioning within the statutory accredited adoption system.

When working through an adoption agency, the process usually starts with the prospective adoptive parents submitting an application to the agency.
Each agency has its own set of requirements – it’s a good idea to phone the particular agency to get their set of criteria before you actually apply in writing.

2. Screening process

All prospective adoptive parents are required to undergo a screening and preparation process. This normally involves:

  • orientation meetings,
  • interviews with a social worker,
  • full medical examinations,
  • marriage and psychological assessments,
  • home visits, and
  • police clearance and the checking of references.

The screening process allows social workers to get to know prospective adopters as a family, their motivation to adopt and their ability to offer a child a warm, loving and stable home.

3. Waiting list

Once the screening process is complete, applicants are placed on a waiting list for a child. Applicants have their own ideas and wishes about the child they wish to adopt.

They can decide about the age and sex of the baby or child they would like to adopt, and adoption agencies will try to meet those personal expectations.

4. Placement

The official placement of the child with the adoptive parents is a legal process, carried out through the Children’s Court.

Once the child has been with the new parents for a period of time, and the social worker has assessed the adoption to be in the best interests of the child, the adoption is finalised through the Children’s Court.

The child then becomes the legal child of the adoptive parents as if the child was born to them and has all the same rights as a biological child.

The position of an adopted child is the same as that of a biological child of the adoptive parent/s and all parental rights and responsibilities his/her biological parent/s or previous legal guardian/s had will be terminated. The adoptive child takes the surname of the adoptive parent/s (unless the Children’s Court decides otherwise). An adoption will not affect the adoptive child’s rights to property s/he obtained before the adoption.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

References:
https://www.legalwise.co.za/help-yourself/quicklaw-guides/adoption/
https://www.westerncape.gov.za/service/adopting-child

Don’t let the smoke leave you broke: Farmers’ duties regarding fires

The National Veld and Forest Fire Act No. 101 of 1998 (“the Act”) is a legislative tool to help farm owners prevent potential financial and infrastructure losses as a result of fire. The definition of an “owner” in the Act includes a lessee or other person who controls the land in question. This article seeks to summarise a farm owner’s responsibilities in terms of the Act.

1. FIRE PROTECTION ASSOCIATIONS (“FPA”)

The Act provides for the formation of a FPA by landowners. The duties of a FPA include predicting, preventing, managing and extinguishing veldfires. They do not however fulfil the role of the fire brigade services. In order to register a FPA, the applicant must be capable of performing the duties imposed on a FPA and the applicant must be representative of owners in the area. The word “area” is not defined in the Act, but the act states that a FPA may be formed by owners who wish to co-operate in respect of an area which has regular veldfires, a relatively uniform risk of veldfires, a relatively uniform climatic conditions, or relatively uniform types of forest or vegetation. Only one FPA may be registered in respect of an area. The municipality and the owners of state land which fall within the area are obliged to become members of a FPA. The Chief Executive Officer of a FPA is the Fire Protection Officer and has the right to enter onto the land of a member of a FPA on reasonable notice, to carry out his duties.

The advantages of being a member of a FPA are that Institutions like RSA Agri, Agri Western Cape and insurance companies support, and in some cases require active participation in an FPA. IPW, GLOBALGAP and HACCP accreditations require membership.

The Winelands FPA was registered with the Department of Agriculture, Forestry and Fisheries in November 2014 amalgamating the former Stellenbosch, Tulbach/Wolseley, Witzenburg, Ceres/Kouebokkeveld and Warmbokkeveld FPAs. To become a member of the Winelands FPA you can download its application form at http://winelandsfpa.co.za/become-a-member/. A once off joining fee of R200.00 and an annual fee of R650.00 is payable for private land owners.

2. FIREBREAKS AND INVASIVE ALIEN PLANT CLEARING

The Act places a duty on landowners to prepare and maintain firebreaks on their side of the boundary to adjoining land. If an owner intends to prepare and maintain a firebreak by burning, the owner must determine a mutually agreeable date with the owners of the adjoining land for doing so, and inform the FPA of the area, if any. If an agreement cannot be reached, such owner must provide the owners of the adjoining land and the FPA for the area (if any), at least 14 days written notice of the period during which the owner intends burning firebreaks. An owner must ensure that a firebreak is wide enough and long enough to have a reasonable chance of preventing a veldfire from spreading to or from neighbouring land, does not cause soil erosion and it is reasonably free of inflammable material capable of carrying a veldfire across it.

The rules of the Winelands FPA state that members must systematically remove invasive alien plants accordingly using the methods prescribed in their rules, as they increase the fuel load of the fire. You can apply through the Winelands FPA for a burn permit for controlled or prescribed burning for the Stellenbosch, Drakenstein, Witzenberg, Breede Valley and Langeberg Municipal areas. Controlled burning is authorised only on Weekdays between the hours of 06:00 and 16:00 for the period from 1 May until 31 October annually.

3. FIRE FIGHTING

The Act places a duty on all owners to acquire equipment, protective clothing and train personnel for extinguishing fires that is reasonably required in the circumstances. Duties of a FPA include organising and training its members in fire fighting, management and prevention; and informing its members of equipment and technology available for preventing and fighting veldfires. A list of the Wineland FPA’s minimum prescribed equipment and protective gear can be found in its rules here. The Winelands FPA requires members or occupiers of land or their staff performing fire fighting to be trained in a basic veldfire fighting course by an accredited training institution and the prescribed modules for the course can also be found at the aforementioned link. The Cape Winelands District Municipality assisted by the Winelands FPA will conduct initial fire training for members and their staff at no cost.

An owner who has reason to believe that a fire on his or her land or the land of an adjoining owner may endanger life, property or the environment, must immediately take all reasonable steps to notify the FPA and the owners of adjoining land and do everything in his or her power to stop the spreading of the fire.

4. OFFENCES

Any person who fails to meet the requirements regarding firebreaks, fire fighting or who prevents a fire officer from doing their work is guilty of an offence under the Act and the abovementioned negligence amounts to fault. The person may be sentenced on a first conviction for that offence to a fine or imprisonment for a period of up to two years, or to both a fine and such imprisonment.

5. DELICTUAL LIABILITY

One of the advantages of being a member of a FPA is that you are presumed not negligent in civil proceedings for veldfires that started on, or spread from your property, in terms of section 34 of the Act. This presumption does however not mean that a third party cannot succeed with a delictual claim against you for the damages suffered by that party. In order to be liable for a delict, the claimant must prove the elements of a delict which are conduct (including omission), wrongfulness, negligence, causation and damage.

Before the presumption can apply, the claimant must prove that damages were caused by a veldfire. “Veldfire” is defined in the Act as a veld, forest or mountain fire. In Van der Eecken v Salvation Army Property Co, 2008 (4) SA 28 (T) the word “veldfire” included starting a fire on the “veld” portion of partly-cultivated land. In Boerdery BK v Transnet Ltd, 2005 (5) SA 490) (SCA) a fire broke out on a railway and from there spread to neighbouring property where it caused damages. The claimant could not rely on the presumption of negligence as the court ruled that the word “veldfire” is defined as the burning of veld and includes unoccupied and uncultivated portions of land which is distinct from the portion which is cultivated, occupied and built upon.

5.1 CAN MEMBERSHIP OF A FPA PER SE CREATE LIABILITY

A question which arises is whether a party who suffered loss due to a veldfire within the area of a FPA, can take legal action against a member of the FPA to recover his/her losses, where a FPA did not prevent a fire from spreading. That is whether membership of a FPA per se can create a liability. The duty to prevent fire spreading appears to be restricted to landowners and occupiers. In Van Wyk v Hermanus Municipality 1963 (4) SA 285 (C) a fire broke out on the land of a third party and the municipality was held to be under no obligation to extinguish the fire. Therefore it can be argued that there can be no negligence if there was no duty of care for the FPA. Furthermore as a FPA is created by statute it appears to have juristic personality and limited liability. Accordingly it would be unlikely that the members of the FPA would be held liable in their personal capacities for the damages. However no case has been reported in which a FPA has been sued, nor its members in their capacity as members of an FPA.

5.2 DUTY OF CARE TO NEIGHBOUR

In the case King v Dykes, 1970 (4) SA 369 (RS) a fire was observed on a farm adjacent to the defendant’s farm. During the night the fire crossed the river onto the defendant’s farm and, after burning out a small patch of veld covered sparsely by grass, died down at its own accord. Early the following morning the defendant visited the scene to inspect the fire, and found that apart from smouldering debris it was no longer burning. He believed there was no further danger from it and returned to the headquarters on the farm. While loading tobacco for conveyance, a thin spiral of smoke was observed in the general direction of the fire. It was important for the defendant to complete the loading of his tobacco, and as a result it was only some 20 to 30 minutes after the smoke had been first observed that the defendant, with his employees, returned to the scene to extinguish the rekindled fire. Due to a strong wind, his efforts to do so were unavailing, and it spread to the plaintiff’s property. The appeal court laid down that there was a legal duty on a farmer who had not started the fire but onto whose land the fire had spread from an adjoining property, to take reasonable steps to fight the fire and to try to prevent it from spreading. Here an undoubted moral duty was translated into a legal duty. The case explained that the idea that prevailed in the past that ownership of land conferred the right on the owner to use his land as he pleased was giving way to a more responsible approach that an owner may not use his land in a way prejudicial to his neighbours or the community and that he holds the land in trust for future generations.

5.3 VICARIOUS (STRICT) LIABILITY FOR ACTION OR OMISSION OF EMPLOYEES

Where an employee, acting within the scope of his employment, commits a delict, the employer is fully liable for the damages. It is a form of strict liability as fault by the employee is not required. There must be an employer-employee relationship at the time when the delict is committed. In Viljoen v Smith, 1997 (1) SA 309 (A), a farm worker went onto the neighbouring farm to relieve himself and started a fire when lighting a cigarette. The question was whether he deviated from acting in the scope of his employment and acted in advancement of his personal interest. This is a decision based on the facts of each case and it is a question of degree. Even when an employee makes a deviation solely for his own purposes, the employer may remain liable for any negligence committed by the employee. The employer was held vicarious liable for the damages that the fire caused to the neighbouring property.

6. INSURANCE

It is important to annually update your insurance policy. Farm owners need insurance against fire damage to crops, assets as well as natural rangeland and pastures. Your asset cover should include buildings, machinery and equipment, damage to stock (including livestock), loss of income, vehicles and funeral expenses. Owners must make sure that they specifically request cover for fire spreading to plantations or sugar cane if they are on neighbouring properties. Should a fire start on your farm and then spread to neighbouring farms, the owner should be covered for damages for which the owner may become legally liable for. Insurance cover can include all reasonable fire extinguishing costs and expenses to prevent the spreading of such fire beyond the borders of the insured’s own premises.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

Interest free loans to trust – not so free anymore?

By Sisteen Geyser

If a Trust owes you money on loan account and the loan is interest free, or the interest rate charged on the loan is below the official rate of interest (currently 8%), you will be liable for donations tax on the deemed interest on the loan from 1 March 2017.

The new tax legislation was imposed to reduce the use of trusts in estate planning which traditionally has the effect of reducing estate duty and donations tax.

Sec 7C of the Income Tax Act is applicable to all interest free or low interest loans (affected loans), including loans in existence, made to a trust directly or indirectly by a natural person, or company that is a connected person in relation to that natural person, and means the interest foregone will be treated as an ongoing and annual donation made to the trust.

Typically, this will be applicable where a person sold an asset to a trust on loan account at a rate lower than the official rate, and/or where the trustees of a trust made a distribution to trust beneficiaries and the beneficiaries loaned the money back to the trust.

There are a few exceptions to this rule:

  • A loan made to a Trust that was used to buy a residence that is used by the lender or the lender’s spouse as a primary residence.
  • Loans to Special Trusts that are created solely for the benefit of minors with disabilities.
  • A loan by a trust beneficiary to a trust that qualifies as a bewind trust, i.e. a trust that holds and administers assets, the ownership of which vests in that beneficiary, for and on behalf that beneficiary.
  • Loans to Public Benefit Organisations Trusts.
  • Depending on the exact terms of the Trust Deed, some loan accounts in respect of distributions to beneficiaries may also not be subject to the deemed donation tax.

The common practice of reducing the lender’s taxable assets by cancelling or waiving the loan to the trust has also been affected by the legislation, which now provides that no deduction, loss, allowance or capital loss may be claimed in respect of interest free loans or low interest loans made to trusts.

However, the annual Donations Tax exemption of R 100 000 will still apply to the deemed donation in terms of Sec 7C, so that donations tax will not be payable if the deemed interest on the loan is less than R 100 000 per year.

Should you have such an affected loan account with a trust, we urge you to contact our Trust and Estate Planning Department. We can check the trust deed and the way in which existing loan accounts came about; and advise on how distributions to the beneficiaries should in future be made, in order to reduce the adverse effects of this new legislation.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

Trusts – What records should be kept and who can request information about trusts?

By Sisteen Geyser

Ever wondered what records should be kept by trustees and whether you can request documents or details from the Master of the High Court, or from the trustees themselves?

What are a trustees’ record-keeping duties?

The Master may issue a written request to Trustees to account to his/her satisfaction and in accordance with his/her requirements about the trustees’ administration and disposal of trust property in terms of Section 16 of the Trust Property Control Act.

The Master may ask that any book, record, account or document relating to the trustees’ administration or disposal of the trust property be delivered to him/her. Trustees may also be called upon to answer questions put to them by the Master concerning the administration and disposal of trust property.

The Master may, if he/she deems it necessary, cause an investigation to be carried out by some fit and proper person appointed by the Master, into the trustees’ administration and disposal of trust property, and may make an order concerning the costs of the investigation.

These records and documents should be kept safe until the expiry of a period of five years from the termination of a trust in terms of Section 17, and may not be destroyed without the Master’s written consent.

What if a trustee does not comply with his/her duties?

If any trustee fails to comply with a request for records by the Master or to perform any duty imposed by the trust instrument or by law, the Master or any person having an interest in the trust property may apply to court for an order directing the trustee to comply with such request or to perform such duty in terms of Section 19.

Copies of Documents

Section 18 specifically provides for the furnishing of copies of the documents under the Master’s control to a trustee, his/her surety or his/her representative or any other person who in the opinion of the Master has sufficient interest in such document, upon written request and payment of the prescribed fee.

Public access to trust information:

Previously some Master’s offices were reluctant to give the public access to information about trusts. In March 2009 the RSA Acting Chief Master brought some clarity and uniformity with a directive regarding access to information.

The procedure to obtain information on a Trust (such as names of Trustees etc.), can now be summarized as follows:

  • Written application should be made to the Office where the Trust is registered, providing reasons why this information is needed.
  • If the request is by a trustee, his/her surety or representative, they will have automatic access to any information/documents in the file.
  • The Master must exercise his/her discretion on the application of any other person, and weigh up the interest of the parties involved in deciding whether or not the information should be provided.  After the Master has requested the input of the Trustees and beneficiaries, he/she will exercise a discretion whether to provide the applicant with the information or not.
  • Should a request for information be denied by the Master’s Office, the applicant will need to apply to the Information’s Officer of the Department of Justice.

It would seem, therefore, that as long as the applicant can provide reasons and show “a sufficient interest” in respect of the trust, the Master should supply him/her with the information.

Beneficiaries’ rights to information:

In the case of Doyle v Board of Executors 1999 2 SA 805 (CPD) the court found that a beneficiary is entitled to request and receive “full, true and proper accounting, duly supported by vouchers” concerning the affairs of the Trust.

Should you require any assistance in obtaining information about a trust in which you have an interest, or need advice on your rights and duties as trustee or beneficiary, please contact our Trust and Estate Department for further assistance.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)