
Since Omne opened its doors in 2006, we’ve often been asked whether trusts are still a good thing.
We believe trusts still have a place, especially when it comes to intergenerational structuring and estate planning but this should be weighed up against the costs and risks associated with running a trust which have increased significantly in recent years. If you want to operate through a trust, you must be aware of and comply with all related regulations and requirements to avoid unwanted penalty costs or even jail time. Remember, all trustees, whether independent or not, are jointly and severally liable for the actions of all trustees of a trust. Independent trustees carry equal liability and must be involved in all decisions taken by trusts, and ignorance is no excuse. This is why the days of independent trustees providing these services as a favour or for free are fast diminishing.
In just the past year, additional bureaucracy has sneaked into legislation, adding another mandatory layer for the already highly burdened South African trust environment, including:
The submission of annual beneficial ownership registers to the Master of the Court.
Submission of IT3(t)’s to SARS in relation to any distributions made to beneficiaries.
Far more granular information and supporting documentation required to accompany annual income tax returns.
A recent Supreme Court of Appeal judgment reminds trustees that unanimity of trustees is essential for the trust to be bound in external matters such as property transactions or suretyships, regardless of what the Trust Deed allows.
The landscape of trust law in South Africa has profoundly transformed with the enactment of the General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Act, No. 22 of 2022. This legislative response follows South Africa’s grey listing by the Financial Action Task Force, marking a concerted effort by the government to enhance financial transparency and combat illicit financial activities.
Central to these amendments are new obligations imposed upon trustees, specifically targeting the recording and reporting of beneficial ownership within trusts. The primary objective is to elevate levels of transparency, accountability, and clarity in trust administration, thereby mitigating the risks associated with maladministration and ensuring the protection of beneficiaries’ interests.
Key among the amendments is the introduction of stringent disclosure requirements for trustees. Unlike the discretionary approach prevalent in the past, trustees are now mandated to disclose all material facts pertaining to a trust’s assets and administration to its beneficiaries. This shift underscores a fundamental change in the regulatory landscape, reinforcing the imperative for trustees to operate with heightened diligence and transparency.
The ramifications of these amendments extend beyond the trustee-beneficiary relationship to encompass a broader spectrum of stakeholders, including clients and their investments. With transparency now mandated, clients in South Africa are compelled to familiarise themselves with these regulatory changes and comprehend their implications for trust relationships and asset management strategies.
Of notable significance is the increased onus placed on clients to ensure the compliance of their trusts with the new regulatory framework. This necessitates a comprehensive understanding of the amendments, their implications for trust management, and proactive measures to guarantee adherence.
Furthermore, the amendments introduce a more robust regulatory framework under the Trust Property Control Act, No. 57 of 1988. Trustees are now required to meticulously establish and record beneficial ownership, maintain comprehensive records, and lodge registers with the Master’s Office. These provisions reinforce the overarching objectives of transparency and accountability within the trust ecosystem.

In parallel with these regulatory developments, the South African Revenue Service (SARS) has implemented reporting requirements for trustees, effectively designating them as “third-party data providers.” Trustees are obligated to submit IT3(t) forms annually, detailing demographic and financial information for each trust. This regulatory measure adds another layer of compliance and administrative responsibility for trustees to navigate.
Amidst the evolving regulatory landscape, trustees face a diverse array of service requirements essential for effective trust management. These encompass statutory services, day-to-day trust administration, independent trusteeship, and specialised accounting and tax services.
Statutory services include vital administrative tasks such as trust registrations, deed amendments, and trustee changes, which have assumed heightened importance in light of recent legislative adjustments. Day-to-day trust administration entails active management, necessitating compliance with a myriad of new obligations, including the meticulous maintenance of information on beneficial owners and accountable institutions.
Independent trusteeship has emerged as a critical component, particularly for family business trusts, demanding individuals with the requisite skills and experience to guide layperson trustees effectively. Accounting and tax services have also undergone transformation, with tax practitioners assuming a pivotal role in verifying trust compliance and adherence to submission requirements.
It is important to note a relevant requirement from the Trust Property Control Act No. 57 of 1988: all Trusts must have a bank account. Additionally, the South African Revenue Service (SARS) mandates that all Trusts, whether dormant or active, must be registered for income tax.
Also note that the dates for the submission of Trust returns have been amended this year. The Trust filing period will open on 16 September 2024, and close on 20January 2025 for all Trusts – including provisional and non-provisional taxpayers.
In conclusion, the recent amendments to trust law in South Africa represent a significant shift towards enhanced transparency, trust, and accountability. While traditional trust service providers may face heightened risks, trustees remain reliant on these services to ensure compliance and effective trust management. Clear communication, proactive engagement, and a comprehensive understanding of regulatory obligations are essential for trustees and service providers alike to navigate this new era successfully.