Trust administration

Question 1

What are the duties of a trustee in trust administration?

Answer 1

1. Lodge the trust instrument with the Master for the district in which the trustees reside or where the administration of the trust takes place
2. Take possession of trust property
3. Dealing with trust assets
4. Impartiality

Question 2

What is the duty of dealing with trust assets?

Answer 2

1. Duty to preserve the trust assets and to dea; with them in accordance with the powers given to the trustee by the trust deed, and for the benefit of the beneficiaries.
2. Trustees act jointly (Van der Merwe v Hydraberg Hydraulics)
3. Majority vote=everyone must know (Steyn v Blockpave)
4. Balance conflicting interests of beneficiaries.

Question 3

What happens if the assets received by the trustee are speculative/risky?

Answer 3

Trustee should convert them to safer assets if permitted by deed

Question 4

What are principal assets?

Answer 4

Original asets that are placed into the trust by the founder for the benefit of the beneficiaries.

Question 5

What are capital beneficiaries?

Answer 5

1. Individuals/entities who are entitled to the capital or principal assets held within the trust once certain conditions or events occur
2. Do not have a current right to the income generated by the trust
3. Long-term or future in the trust

Question 6

What are income beneficiaries?

Answer 6

1. Individuals entitled to receive the income or profits generated by the assets held within the trust
2. Have the right to receive regular payments from the trust’s income as specified in trust deed
3. Have a short-term or temporary interest in the trust.

Question 7

Can a trust enter into a contract?

Answer 7

Courts are willing to apply a fiction of legal personality to situations where the trustees clearly act for the trust in concluding a contract in the trust’s name (Std Bank v Swanepoel)

Question 8

Which case deals with apparent authority?

Answer 8

AAA Investments v Hugo.

Question 9

What are the common law limitations on trustees?

Answer 9

1. No borrowing money on behalf of trust
2. Mortgage a property owned by trust
3. Let property owned by the trust

Question 10

What is the trustee’s duty of impartiality?

Answer 10

1. Trustees may not favour themselves at the expense of the beneficiaries
2. Trustees may not unfairly favour one beneficiary/group at the expense of another.

Question 11

Which case deals with trustee’s duty of impartiality?

Answer 11

Harris v Fisher.

Question 12

What must a trustee do if they wish to beenfit one class beneficiaries at the expense of the other?

Answer 12

Obtain written consent of beneficiaries who will be prejudiced, indemnifying trustee from future claims arising from actions.

Question 13

Which provision deals with amendments to trust deed?

Answer 13

Section 4(2).

Question 14

What does section 4(2) hold?

Answer 14

When a trust instrument which has been lodged with the Master is varied, the trusyee shall lodge the amendment or a copy thereof for certification with the Master.

Question 15

Which cases deals with amendments to trust deals?

Answer 15

1. Groeschke v Trustee
2. Hanekom v Voight

Question 16

What did the court hold in Groeschke v Trustee?

Answer 16

A deed of trust is a contract and applied contract law to come to the conclusion that amendments to the deed are valid even if not lodged with the Master.

Question 17

What did the court hold in Hanekom v Voight?

Answer 17

The will and the trust which arises from it are separate, and the trustees, once appointed by the Master, are free to amend the trust deed, even if the amendments conflict with the provisions of the will which was the origin of the trust.

Question 18

Which case sets out the form of the deed?

Answer 18

Dube v RAF.

Question 19

Does a trust created by court order automatically fall under the Master’s jurisdiction ito the TPCA?

Answer 19

So the deed/court order should explicitly grant supervisory authority to the Master.