By Sisteen Geyser – Director, Estates and Trust Department
The Master recently published Guidelines setting out requirements for the appointment of an Independent Trustee, “where the trust is registered for the first time with the Master and it emerges from the Trust Deed that the trust is a “family business trust”.
A “family business trust” is a trust where the trustees have the power to contract with independent third parties, thereby creating trust creditors, where all the trustees are beneficiaries and all the trustees are related to one another.
Such an independent trustee need not be a professional person, but must be an independent outsider (with no family relation to any of the existing or proposed trustees, beneficiaries or founder of the trust) who understands the responsibilities of trusteeship, and will ensure that the trust functions properly and that the provisions of the trust deed are observed.
More importantly, such a trustee “must be competent to scrutinise and check the conduct of the other appointed trustees who lack a sufficiently independent interest in the observance of substantive and procedural requirements arising from the trust instrument. Has no reason for concluding or approving transactions that may prove to be invalid, because he or she would be knowledgeable about the law of trusts.”
The Master may, in certain circumstances, dispense with the appointment of an independent trustee.
Please note that although the Guidelines are applicable to new trusts, it may be necessary to appoint an Independent Trustee to the trust in terms of the Trust Deed, or to ensure that there will be a proper distinction between control and benefit under the trust.
Should you need assistance with the appointment of an Independent Trustee, you are welcome to contact our Estates and Trust Department.
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)