Duties of trustees

In a nutshell

Being a trustee in a trust is a big deal! You’re like the superhero responsible for managing the trust, making sure everything runs smoothly, and following all the rules. But hey, no pressure, right?
Your job is to always have the trust’s back and look out for the beneficiaries – they’re like your trust sidekicks! And trust me, there are serious consequences if things go sideways, so you gotta stay on your A-game.
To rock this trustee gig, you gotta know your stuff – that means understanding all the legal mumbo jumbo and reading the trust deed like it’s your favorite comic book. And if you’re thinking about taking on the trustee mantle, make sure you know what you’re signing up for. And trust founders, pick your trustees wisely – it’s like assembling your own superhero team!
So, if you’re ready to don your trustee cape and embrace your inner trust hero, let’s do this! With great trust comes great responsibility, but also great rewards. Let’s make this trust adventure one for the books!

Creating a trust is like entrusting your assets to a trusty sidekick – the trustee (or trustees). Think of them as the guardians of your treasure chest, entrusted to manage it for the benefit of the trust’s beneficiaries. But hey, every superhero needs a little guidance, right?

The role of a trustee is no joke. They’re not just responsible for managing the trust; they’ve got a whole list of duties and rules to follow, and some things they’ve gotta steer clear of. But here’s the kicker – they’ve always gotta have the trust’s back and look out for the beneficiaries, no matter what.

Now, when life throws curveballs, trustees need to be ready to dodge ’em. There are legal consequences to consider, and sometimes, trustees might not even know what moves to make next.

But fear not, trusty trustees! Before you break a sweat, start by getting a handle on your superhero duties – that means understanding the ins and outs of South African trust law. With a solid grasp of the basics, you’ll be ready to tackle anything that comes your way and be the hero your trust deserves!

What trustees must do

The cornerstone principle for trustees is to operate with the utmost care and skill, meeting the expectations of someone managing the affairs of another. Failing to uphold this standard can land them in hot water, facing personal liability. Here’s a breakdown of the duties trustees must uphold, according to the TPCA and common law:

Acting in Good Faith: Trustees must always act with the highest degree of good faith, ensuring they prioritize the interests of the trust and its beneficiaries above all else.
Adhering to Trust Deed Stipulations: Trustees are bound to follow the provisions outlined in the trust deed. They don’t have the leeway to pick and choose which rules to follow or disregard.
Maintaining Separate Trust Accounts: It’s imperative for trustees to open separate trust accounts at banking institutions. This ensures that funds belonging to the trust are kept separate from any other entity’s money, preventing commingling.
Trustees’ Record-Keeping Obligation:Trustees are required to maintain accurate records that clearly indicate the property held in trust by the trustees.
Identifiable Trust Accounts and Investments: Trustees must clearly designate any accounts or investments held at financial institutions as belonging to the trust. This ensures transparency and accountability in the management of trust funds.
Accounting to the Master: Upon written request from the Master, trustees are obligated to provide an account of the administration and disposal of trust property. They must also comply with any further requirements set forth by the Master.
Exercising Independent Discretion: Trustees must make decisions independently, using their own judgment and discretion in matters relating to the trust. This ensures that their actions are aligned with the best interests of the trust and its beneficiaries.
Joint Action for Multiple Trustees: In cases where there are multiple trustees, they must collaborate and act jointly. This ensures cohesive decision-making and accountability among all trustees involved.

By adhering to these duties and principles, trustees can uphold the integrity of the trust and fulfill their fiduciary obligations with diligence and professionalism.

What trustees must not do

Once again, the trustees’ primary mission is crystal clear: they must always act in the best interests of the trust and its beneficiaries. This golden rule should be the North Star guiding their every decision. Here’s a rundown of what trustees must steer clear of, as dictated by the TPCA and common law:

Risking Trust Assets: Trustees are prohibited from exposing trust assets to risks, including business risks, as this would breach their fiduciary duties. However, business trusts may grant trustees the authority to engage in trading or business activities through the trust deed. Nevertheless, trustees must ensure they do not subject the trust to undue risks, even in such authorized business endeavors.
Pre-Formed Trusts and Letters of Authority: It’s a no-go for anyone to act as a trustee on behalf of a trust that hasn’t even been formed yet. Trustees can only swing into action once the Master issues those all-important Letters of Authority.
Withholding Information from Beneficiaries: Transparency is key! Trustees mustn’t keep beneficiaries in the dark. They’re obligated to provide accurate and comprehensive accounts when requested.
Staying Within Delegated Powers: Trustees can’t go rogue and start flexing powers that aren’t explicitly granted to them in the trust deed. They must stick to the script and operate strictly within their designated authority.
Active Participation of Trustees: Teamwork makes the dream work! One trustee can’t just kick back and let the others do all the heavy lifting. Each trustee must roll up their sleeves and actively contribute to decision-making and execution.
Preserving Trust Documents: Trust documents are sacred! Trustees can’t go shredding them without the Master’s consent, especially not before five years have passed since the trust’s termination date.
Avoiding Conflicts of Interest: Trustees can’t play both sides. If there’s a conflict between the trust’s interests and their personal agendas, they must ‘fess up and inform their fellow trustees pronto.
No Personal Profiteering: Sorry, trustees – no dipping into the trust cookie jar for personal gain. Except for lawful and reasonable compensation, they can’t line their pockets with trust funds.

Additional obligations and restrictions may be placed upon trustees, contingent upon the stipulations outlined in individual trust deeds. As a result, it is imperative that trustees carefully review and grasp the content of a trust’s deed. This diligence ensures they are adequately prepared to carry out their responsibilities in alignment with the trust’s directives.

Conclusion

In conclusion, trusts offer a versatile framework, yet this flexibility is balanced by the stringent responsibilities imposed on trustees. Acting in a fiduciary capacity, trustees are bound by a duty of utmost good faith towards the trust and its beneficiaries. Given the weight of these duties and obligations, individuals considering trustee roles should exercise caution and ensure they fully understand the associated responsibilities and limitations before accepting appointments. Likewise, trust founders, whether individuals or companies, should exercise prudence in selecting trustees, recognizing the critical role they play in safeguarding the trust’s interests and fulfilling its objectives.

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