Earlier this month, government published the Regulation of Trusts Bill (‘the Bill’) for public comment. Intended to repeal and replace the Trust Property Control Act (‘the Act’), the Bill provides for, inter alia, the creation and administration of trusts, the powers, duties, disqualification, and removal of trustees, the jurisdiction of the Master of the High Court, trustee authorisation and disqualification, the variation and termination of trusts, and penalties.
Why is the current legislation being replaced?
The Trust Property Control Act (‘the Act’) has not been comprehensively reviewed for 38 years. The socio-economic, legal, and practical environment in which South African trusts operate, however, has changed significantly. For government, the shortcomings of the current legal framework include limitations on the Master’s oversight, inadequate protection for beneficiaries, and insufficient transparency in the management and control of trust property. Additionally, the risk of trusts being misused for money laundering, terrorist financing, and other criminal activity has increased. Given these critical considerations, the Bill seeks to enhance compliance and transparency by aligning the regulation of trusts in South Africa with the Financial Action Task Force recommendations – and ensuring the country is not re-added to the grey list – without imposing unnecessary regulatory burdens.
The existing Act – inclusive of amendments that were promulgated in 2022 and took effect in 2023 – already contains substantial legal requirements concerning trustee authorisation, beneficial ownership, trustee duties, trust money and property, the Master’s powers, and certain offences. Crucially, however, the Bill proposes to replace, expand, and reorganise that regime, while introducing various additional and more prescriptive obligations.
Beneficial ownership: Enhanced prescriptive compliance
In the trust administration arena, beneficial ownership is not new. The Bill retains a broad definition of ‘beneficial owner’, which encompasses natural persons who ultimately own relevant trust property or exercise effective control, as well as founders, trustees, and named or identifiable beneficiaries, together with the relevant natural persons behind juristic persons and partnerships.
The Bill, however, tightens compliance requirements. For instance, section 23 of the Bill requires trustees to establish and record beneficial ownership, maintain prescribed information, and lodge the beneficial ownership register with the Master. Any changes must be recorded within 10 days and thereafter lodged within 10 days of said recordal. To limit errors, the Master must maintain their own register, with access available to prescribed persons.
In line with the growing risks identified by government, the Bill introduces a formal risk-based framework. The Chief Master must ensure that a risk assessment is conducted to identify domestic and international money-laundering and terrorist-financing risks affecting trusts. Thereafter, the assessment must be reviewed every three years and after specified significant developments. Crucially, the Bill introduces a statutory risk-based mechanism for exemptions: On the basis of the risk assessment, the Minister may determine that particular trusts or categories of trusts present a low risk and exempt them from section 23, subject to certain conditions.
Independent trustees: Not mandatory for every trust
In certain defined instances, the Master may appoint an independent trustee – notwithstanding the provisions of the trust deed. For example, where it is necessary to ensure the separation of control and enjoyment of trust property, provided that all trustees are beneficiaries, all trustees are related, and the trust conducts business or trading activities with third parties that give rise to obligations to those third parties. However, any trustees and beneficiaries with vested rights must be consulted first.
Under the Bill, an ‘independent trustee’ is defined as a person who is not related to the founder or another trustee, accepts office to ensure that the trust is properly administered in accordance with the trust instrument, has no personal interest in the trust property and is able to exercise independent judgment. By extension, ‘related’ includes spouses and persons living together in a relationship similar to marriage, and persons separated by not more than two degrees of natural or adopted consanguinity or affinity, such as grandparents and parents-in-law.
Notably, the Master’s appointment powers extend beyond independent trustees. Where a vacancy cannot otherwise be filled, the Master must in specified circumstances appoint a trustee; where all trustees have vacated office, the founder, or failing the founder, beneficiaries with vested rights, must nominate a person for appointment. The Master may also appoint co-trustees where necessary to ensure proper trust administration.
The creation of trusts and protection of vulnerable beneficiaries
The Bill sets out express statutory requirements for the creation of a trust. The founder must, with reasonable certainty, indicate an intention to create the trust, identify the trust property and beneficiaries or trust object, and appoint or provide for the appointment of a trustee. The object must be lawful, and a sole trustee may not be the sole beneficiary. If the statutory requirements are not met, the court must declare the trust invalid in accordance with section 4(4), with the Bill allowing the declaration to operate from inception or from the date on which the non-compliance began.
To enhance the regulation of trusts in South Africa, the Bill responds directly to the concerns identified by government regarding the exploitation of vulnerable persons. Specifically, a trust may not be created to protect damages awarded to a child or to a person whom the court believes may be unable to manage the funds unless itemised safeguards are met. These include the appointment of a curator ad litem who recommends the trust, judicial consideration of whether a trust is appropriate, and whether the draft trust instrument adequately protects the beneficiary, and consideration of trustee remuneration. Critically, the Bill also prevents a trust from being created to administer property received by a community from the State under an agreement or law.
Lodgement of trust instruments and amendments
While the obligation to lodge the trust instrument with the Master is not new, the Bill nevertheless expressly permits an electronic copy to be lodged and continues to require the prescribed fee. A person appointed as a trustee may not assume control of trust property before the trust instrument has been lodged and the fee paid.
A more significant change, however, concerns amendments. A trustee may lodge an amendment only if the prescribed beneficial ownership information is up to date. The trustee may not exercise any powers or perform duties deriving from the amendment until it has been lodged with the Master and the Master has acknowledged said lodgement. An act performed contrary to that requirement is consequently invalid, and the trustee will be personally liable for any direct or indirect loss suffered by the trust as a result of the contravention.
Trustee duties: Carrying forward existing standards and adding new investment rules
The existing Act already imposes a statutory care, diligence, and skill standard on trustees. The Bill imports that principle but expressly requires consideration of any special knowledge or experience the trustee has or holds themselves out as having, as well as knowledge or experience reasonably expected of a person acting in a particular business or profession. It also retains the restriction on contractual provisions exempting trustees from liability for failure to meet the prescribed standard.
A more substantive development is contained under section 16 of the Bill. This provision states that a trustee may invest trust property in a form of property or security in which a prudent investor might invest. Where appropriate, the trustee must consider the trust’s objectives and beneficiaries’ needs, diversification, investment risk, capital preservation and appreciation, expected returns, liquidity, inflation, tax consequences, investment costs, and the overall investment strategy. The provision does not authorise an investment that is prohibited by the trust instrument or is inconsistent with it.
Moreover, the Bill reorganises existing operational requirements concerning dealings with accountable institutions, separate trust accounts, and the identification of trust property. As such, a trustee must disclose that they are acting as trustee and that the relevant transaction or relationship concerns trust property; trust money must be deposited into a separate account in the name of the trust; and trust property must be identifiable in the trustee’s records and, where applicable, on registration.
Annual financial statements, annual returns, and record retention
A notable addition is the proposed general requirement for annual financial statements. Section 20 of the Bill requires the submission of annual financial statements, subject to an exemption where the aggregate inflows and outflows of trust property fall below thresholds still to be determined by the Minister. The Master may require the statements to be submitted within one month of a written request, subject to any further period allowed.
The Bill also introduces statutory annual returns, which are separate from annual income tax return obligations administered by the South African Revenue Service. Trustees must file returns in the prescribed manner, pay the required fee and comply with the statutory timing requirements. For trusts already in existence when the legislation commences, the first return must be filed within six months of commencement.
Furthermore, trustees must retain specified records throughout their trusteeship and for five years after ceasing to act. These records include the trust instrument, records of donations and trust property, variations, asset and liability records, trustee resolutions, contracts, accounting records and financial statements, and records evidencing the investment, administration, and distribution of trust property.
The remuneration, resignation, and removal of trustees
Although trustee remuneration is already regulated under the current Act, the Bill develops the framework by specifying factors relevant to ‘reasonable remuneration’, including the size and nature of the trust property, time spent, skill required, difficulty, and comparable charges. Where the trust instrument does not provide for dispute resolution, a remuneration dispute must first be referred to mediation, subject to the exception for urgent court relief.
Under the Bill, the resignation of trustees is formalised. A trustee must notify the Master, the other trustees, and known beneficiaries with vested rights of their intention to resign. Their resignation only becomes effective once the trustee has received the Master’s written acknowledgement of the resignation documents. Post-resignation, a trustee, however, may remain liable for failure to discharge their fiduciary duties during the period of trusteeship.
Critically, the Bill restates and expands the powers to remove trustees, including in circumstances such as failure to provide required security, sequestration, liquidation, business rescue, debt review, and for failing to satisfactorily perform a statutory duty or comply with a lawful request of the Master.
A stronger supervisory and enforcement framework
Under the current Act, the Master is empowered to call upon trustees to account and to investigate. The Bill expands and formalises that framework. For example, section 12 specifies the trustee’s obligations to account, produce documents and answer questions, and provides for investigations by a fit and proper person. It also permits investigations following requests by founders, beneficiaries with vested rights, trustees, and other persons with a vested interest. Practically, the Bill regulates the allocation of investigation costs and permits the Master to require security for those costs from the person requesting an investigation.
Notably, a more significant new enforcement mechanism is the introduction of compliance notices and administrative fines. In a bid to enhance the regulation of South African trusts, the Master may issue a compliance notice for omissions involving contact details, accounting, financial statements, annual returns, and beneficial ownership. Failure to comply may result in an administrative fine. While a trustee may appeal to the Director-General, the fine remains a personal liability and may not be recovered from trust property.
Additionally, the Bill exptends and reorganises criminal offences pertaining to trust maladministration. Certain contraventions carry fines of up to R10 million, a maximum imprisonment of five years, or both, including specified failures relating to trust accounts, the identification of trust property, and beneficial ownership information.
Variation, termination, and reporting irregularities
Under the Bill, a court’s power to vary trust provisions where unforeseen consequences hamper the achievement of the trust’s objects, prejudice beneficiaries or conflict with public interest is retained, and permits an order terminating the trust.
Crucially, section 28 of the Bill introduces a more formal trust termination mechanism. The trustee must inform the Master when the trust terminates and the Master must then record the termination and remove the trust’s name from the trusts register. Under the Bill, the trust terminates on the date of that removal.
On the reporting front, the Bill imports the existing regime concerning material irregularities identified by auditors and requires the irregularity to be dealt with under the Auditing Profession Act. Crucially, personal information held under the Bill is subject to the requirements of the Promotion of Access to Information Act.
Conclusion: An enhanced legal framework
Against the backdrop of government’s aim to enhance trust administration in South Africa, the Regulation of Trusts Bill builds on the existing statutory framework — much of which was itself strengthened in 2023 – and proposes more comprehensive and prescriptive provisions to advance regulatory compliance, increase the Master’s powers, and ameliorate money-laundering and terrorist-financing risks. If enacted, the practical effect of the Bill will depend in part on the Regulations still to be made. While the Bill constitutes a significant proposed restructuring of South African trust regulation, it should not be characterised as replacing an otherwise unregulated system. Instead, its importance lies in the extent to which it will strengthen the current trust regime.
Have your say. Submit your comments on the contents of the Bill via email on or before 11th September 2026.
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