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Wealth Masters - Contracting on behalf of a Trust

Updated: Mar 22, 2023

Article by Annemarie Schutte

When transacting on behalf of a Trust, it is essential to familiarise yourself with and to take the following factors into account:

  • Are you a Trustee or an Agent of a Trust?

  • What powers and duties do you have regarding the Trust Deed, Trust Property Control Act or Resolution?

One must recognise the difference between a "Trustee" and an "Agent of a Trust". A Trustee is authorised by the Master of the High Court (section 6 of the Trust Property Control Act 57 of 1988) by a Letter of Authority issued by the Master of the High Court. The Trustees must act according to their powers in the Trust Deed and duties imposed by common law.

All decisions made by the Trustees should be unanimous. When a Trust Deed makes provision for delegation of powers, it is essential to remember that this does not relate to areas where the Trustees call for discretion when carrying out their management and control duties, which agrees with the principle that fundamental decisions relating to the Trust need to be taken by the Trustees. Even though the Trustees may delegate the implementation of these decisions to others, the responsibility ultimately remains with the Trustees.

In Niewoudt and another NNO v Vrystaat Mielies (Edms) Bpk 2004(3) SA 486 (SCA), the Court stressed the importance that decisions regarding the Trust should be reached unanimously by the Trustees, as the Trustees are in joint control of the Trust Assets. The Court noted that Trustees could delegate powers to a single Trustee. This decision must be made in writing and signed by all Trustees; otherwise, the decision is considered null and void.

On the other hand, an Agent is appointed by the Trustees, to act on a decision already made by the other Trustees. Therefore, the Trustees make the decisions mutually and may appoint an Agent to execute the decisions. An Agent's appointment and the specific action/mandate must also be made in writing and signed by the Trustees. The Agent will be authorised to perform the particular actions regarding the Resolution.

I often receive Trust Deeds drafted by other institutions, which provide for "Alternate Trustees", where a Trustee delegates its powers to an independent third party when they cannot fulfil their duties. By law, a Trustee cannot delegate its decision-making power without a letter of authority signed by the Master of the High Court.

Any decisions and transactions made on behalf of a Trust, where an "Alternate Trustee" participated, are invalid and of no force and effect. Only the Trustees authorised by the Master of the High Court may act and transact on behalf of the Trust.

If a Trustee cannot fulfil their duties at any time, the Trustee should resign from their role, and the remaining Trustees should appoint another Trustee.

In summary, a Trustee has authority from the Master of the High Court with specific powers and duties. When a Trustee accepts this position, they also carry the powers and responsibilities of the Trust Deed and the Trust Property Control Act and must act in terms thereof.

The Trustees of a Trust appoint an Agent to execute a unanimous decision made by the Trustees.

Speak to your Trust Advisor to ensure your Trust Deed is in alignment with the Trust Property Control Act and South African Case Law and that you, as Trustee, act per your prescribed powers to receive the benefits an adequately managed Trust Structure has.

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