Page 30 - Nexia SAB&T Trust Guide 2024

Bookkeeping, accounting and financial statements – a trustee must keep,
at the office of the trust, accounting records that fairly represent the trust’s
state of affairs and business and explain its transactions and financial position.
These records must be available for inspection by any trustee or beneficiary. The
trustees are responsible for producing annual financial statements. A trust does
not require an audit, unless the Master of the High Court or the beneficiaries
request it, or should the trust deed contain a provision requiring an audit.
Asset Register – maintain an asset register for the trust.
Increased disclosure requirements on trustees
The amendments to the Trust Property Control Act are significant – the intention
being to increase the disclosure requirements on trustees, mainly in terms of the
new Section 11A(1).
The Independent Trustee
The way in which the trust deed is drafted is important, and also the way in
which the trust and the trust assets are administered.
It is an abuse of a trust where a person creates a trust, transfers assets to
the trust, and then treats the trust assets as though they were his own. The
appointment of a truly independent trustee is a true reflection of a founder’s
intention to create a valid trust. It is thus advisable that at least three trustees,
one of whom is completely independent, are appointed to act as such, so that
the founder (who may be a trustee and a beneficiary) will have a minority vote.
In Land and Agricultural Bank of South Africa v Parker (2005), the Court
suggested that each family trust should appoint an independent trustee. And in
March 2017, the Chief Master issued a directive which sets the requirement for
the appointment of an independent trustee for all trusts which are defined as
“family business trusts”.
This is typically a trust set up for the protection of family assets, where the
trustees are all beneficiaries, and they are all related. If no independent trustee
is appointed for such a family business trust, the Master of the High Court will
refuse the registration of the trust.

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