Cerize Roets — Head of Legal Services, Kilgetty Statutory Services
In March 2017, the Chief Master announced new changes to the administration of trusts. These changes are to be implemented by various Masters’ officers and one of these changes relates to family business trusts and the appointment of an independent trustee.
Independent trustees — Key Characteristics
An independent trustee is required to effectively be a person with a specific level of knowledge, integrity and professional skill. The following are key characteristics such an independent trustee should display:
- An independent trustee has no relations to the trustees, beneficiaries or the founder of the trust. This individual is aware of the responsibility of trusteeship in order to ensure proper function of the trust in line with the provisions of the trust deed;
- The independent trustee is not required to be a professional person, but will be required to have the necessary knowledge in order to assist with trust management;
- The independent trustee may be an admitted attorney, professional accountant, advocate or a fiduciary practitioner who is a member of the Fiduciary Institute of Southern Africa;
- Is not disqualified by the Trust Property Control Act, 1988 from acting as a trustee;
- The independent trustee cannot be a beneficiary of the trust and should have no interest in the trust property or assets; and
- The independent trustee should have knowledge and experience in the field of business the trust operates in.
Adhere to following criteria
Part of the changes includes that where a trust is registered for the first time, the Master is required to appoint an independent trustee to which the following criteria should be adhered to:
- Trust deed stipulates that that an independent third party should be appointed;
- Where the trustees are all beneficiaries; and
- Where the beneficiaries are all related to one another.
Should the trust deed not make provisions for the appointment of an independent trustee and the Master finds it necessary, the Master must request nominations for the appointment from the founder, existing trustees and beneficiaries with a vested right in the trust. It is, however, in the discretion of the Master to accept the nomination or to select another suitable person.
Further noteworthy points
The Master may relinquish to appoint a trustee and will in this instance request security to be provided by the trustees or request the financial statements of the trust to be audited annually.
Should the independent trustee resign, given that the trust deed makes provisions therefore, the independent trustee shall be replaced with another independent trustee. The replacement trustee should comply with the same provisions of independence.
Where a trust deed is silent on the remuneration of an independent trustee fee, the Master may use Section 22 of the Trust Property Control Act, 1988 to determine a reasonable fee. The independent trustee is entitled to a fee just like any other trustee of the trust.
It is, therefore, vital to consider the appointment and replacement of the independent trustee within the trust deed either by amendment or by inception of the trust.
Kindly contact our offices for assistance with changes such as independent trustee appointment, resignation, appointments, amendments to trust deeds and the registration of an inter vivos trust. Contact Cerize Roets at cerize.roets@kilgetty.co.za or at 0832275508.
