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Trusts: Trustees - Coggle Diagram
Trusts: Trustees
Duties of Trustees
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Duty to act with Care, diligence and Skill s9 of the Act
Reasonably expected of a person who manages the affairs of another
- s9(2) voids trust if it has clause exempting trustee from this requirement.
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Keep proper records and to be accountable s11
- Asset register - must on request account to Master for administration and disposal of trust property (s16)
Duty to preserve documents s17
- may not destroy docs which serve as proof of investment, sae custody, admin, alienation or distribution of trust property within 5 years of termination of the trust without written consent of Master
Duty to administer, protect and invest trust assets
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The Beneficiaries
Must have at least 1 beneficiary
Can be income or capital beneficiary, or combination
Trust as beneficiary under a will
- Trust can be a beneficiary under a Will (Kohlberg v Burnett NO and Others
- Question around whether Testamentary disposition to Inter Vivos trust was valid
Held that trustees in law entitled to act obo Trust to hold property.
A bequest to a trust is valid.
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Powers of Trustees
- Derived from Trust Deed
- if power not mentioned in Trust Deed, inferred that Founder did not want to convey that power.
If acting outside of powers, action is null and voice in law, trustee seen to be acting personally with resulting personal consequences.
Personal liability and breach of duty
s9(1) and s9(2) of Act
Provision in trust exempting trustee or indemnifying from liability for a breach of duty - void
Regaining Control of a trust
s3(3)(d) of Estate Duty Act
- Must ensure that doesn't have effective control over trust assets, otherwise deemed property for estate duty purpose.s
- In practice, founder retains right to appoint and remove trustees. SARS could argue this is effective control.
- Should not be restricted to founder.
Useful wording:
"Notwithstanding the provision of this trust deed; no individual person including the founder may control, dispose of or make use of the capital or income of the trust save by permission of the majority of the trustees"
- other reasons - argument for "alter ego"; distribution to ex spouse ito Divorce order