Page 5 - Nexia SAB&T Trust Guide 2022

LEGAL STATUS OF TRUSTS IN SA

The rules of South African trust law are a mixture of English, Roman-Dutch and
South African law.
A trust is not a juristic (legal) person that can be owned, sold, or transferred. It does
not have a legal personality, because it is simply an accumulation of assets. Any
property held in trust is held by the trustees in their capacity as trustees, and cannot
be “owned” by the trust itself. Trust property may be movable or immovable, and
may include contingent interests in property. Such property is to be administered
or disposed of by a trustee in terms of the deed. Without a legal personality, a trust
does not have legal standing, and therefore the trust itself cannot sue or be sued.
The trustees, in their official capacity, however, can sue and be sued – in other
words, they act on behalf of the trust, and in this capacity can bring and defend
actions concerning the trust.
It is possible in South Africa to have a valid verbal/oral trust agreement which has
not been reduced to writing. These oral/verbal trust agreements are governed by
the common law. However, although the registration of a written trust deed with the
Master of the High Court does not impact on the legality of the trust deed, section
6(1) of the Trust Property Control Act (no.57 of 1988) (hereinafter referred to as
the Trust Property Control Act), states that no person may act as a trustee without
the proper authorisation from the Master of the High Court, which is in the form of
Letters of Authority. Accordingly, in most cases, a written trust instrument is created,
and registered at the applicable Master of the High Court’s office in South Africa.
This written trust instrument is automatically governed by the Trust Property Control
Act, which forms the framework in which trusts operate, and regulates most aspects
relating to a trust’s administration. All actions and decisions taken by the trustees
must be made in reference to the trust deed and the Trust Property Control Act.
Certain pieces of legislation in South Africa treat a trust as having a seperate legal
personality – such as the Deeds Registry Act (no.47 of 1937), Transfer Duty Act
(no.40 of 1949), Value Added Tax Act (no.89 of 1991), Income Tax Act (no.58 of
1962) and the Insolvency Act (no.24 of 1936), as amended. The Companies Act
(no.71 of 2008), in its definition of a “juristic person”, includes a trust (irrespective
of whether or not it was established within or outside of South Africa).
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