Page 8 - Nexia SAB&T Trust Guide 2024

TRUST INSTRUMENT

Where the founder of a trust has decided to set up a trust and have the
arrangement reduced to writing, a trust instrument is created. This is the trust’s
constitutional document, which defines the framework in which the trust must
operate, including its powers and limitations.
All actions and decisions taken by the trustees must thus be made in reference
to the trust deed, the Trust Property Control Act, and South African case law.
The trust instrument must clearly establish a separation between the right to control
the trust assets, which is held by the trustees, and the right (whether vested or
contingent) to benefit from the trust assets, which is held by the beneficiaries.

Section 1 of the Trust Property Control Act states that the trust instrument is
either the:
■ Written agreement, called the Trust deed – which creates an inter vivos /living
trust, or
■ Last Will and Testament – which creates a testamentary trust, or
■ A court order, according to which a trust is created.
Some of the items specified in the trust instrument include:
■ The name of the trust, the founder, and the trust’s aims and objectives.
■ The names of the beneficiaries and whether they are to be income or capital
beneficiaries (or both).
■ The names and identity numbers of the first trustees, and the minimum number
of trustees who are required to administer and manage the trust assets.
■ The rights and obligations of the trustees, including their powers and duties.
■ The remuneration of trustees, as well as the requirements for the
reimbursement of their expenses.
■ Requirements for meetings of trustees, such as quorum and voting, and their
ability to delegate their powers in certain circumstances.
■ Rules and restrictions regarding the distribution of income and capital.
■ The duration and procedure on termination of the trust.
■ The procedure to be followed if the trust needs to be amended.

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