Amending a trust deed
Start with the founding instrument, because the power to amend depends on it. An inter vivos trust deed is treated in South African law as a contract for the benefit of third parties (a stipulatio alteri). Because it is a contract, it can only be varied by agreement of the parties to it — and the deed’s own amendment clause tells you who those parties are and what they may change. In a typical family trust that means the founder and the trustees, acting jointly within the powers the clause confers. A testamentary trust has no living founder to agree, and a trust created by court order is governed by that order; for those, variation follows the will, the order, or the court’s power under section 13 (below). Identify the instrument and the power first, then the required signatures and consents.
There is a complication that catches people out. Once a beneficiary has accepted a benefit under the trust, that beneficiary acquires a personal right and is, in effect, a party to the arrangement. From that point an amendment that affects the beneficiary’s rights generally needs that beneficiary’s consent as well — the founder and trustees can no longer simply rewrite the deed over their heads. Until benefits are accepted, the founder and trustees usually retain the freer hand the deed gives them. Two cautions on that common-law position: it turns on the wording of the particular deed and on any powers the founder expressly reserved, so neither “consent is never needed” nor “an accepted benefit freezes every clause forever” is a safe general rule.
Whatever the deed allows, the practical steps are the same: record the change in an amending deed or a properly minuted trustee resolution, have the right people sign it, and then lodge it with the Master of the High Court so the official trust file reflects the current terms. The Master charges nothing for this — the Master’s trusts page says “There are no costs involved in amending an existing Trust.” Trustees act under the Master’s letters of authority, and they owe the standard statutory duty of care in doing so — see a trustee’s duties.
A trustee shall in the performance of his duties and the exercise of his powers act with the care, diligence and skill which can reasonably be expected of a person who manages the affairs of another.
Note — An amendment is a trustee act like any other: it must be carried out with this same care, diligence and skill, within the deed and the law. A variation made carelessly, or outside the deed’s amendment power, can be challenged.
Where the deed itself cannot be amended by agreement — or the change goes further than the amendment power allows — the High Court can vary or delete a provision, but only on the statutory grounds. The test is not inconvenience: the provision must bring about consequences the founder did not contemplate or foresee, and one of the three listed harms must follow:
If a trust instrument contains any provision which brings about consequences which in the opinion of the court the founder of a trust did not contemplate or foresee and which— (a) hampers the achievement of the objects of the founder; or (b) prejudices the interests of beneficiaries; or (c) is in conflict with the public interest, the court may, on application of the trustee or any person who in the opinion of the court has a sufficient interest in the trust property, delete or vary any such provision or make in respect thereof any order which such court deems just, including an order whereby particular trust property is substituted for particular other property, or an order terminating the trust.
Adding or removing beneficiaries
Adding a beneficiary — a new child, a grandchild, a spouse — is one of the most common reasons to touch a deed. Whether you can do it depends on the deed: some deeds give the trustees an express power to add (and sometimes remove) beneficiaries; others require a formal amendment by the founder and trustees. Removing a beneficiary is harder, because a beneficiary who has accepted benefits has rights that cannot simply be stripped away without consent.
The discretionary-trust structure is designed for exactly this flexibility: the trustees decide each year who receives what, which suits a growing family. But adding someone to the class of beneficiaries is different from making a distribution, and it must be done under the deed’s actual power — not assumed. When you do add a beneficiary, two things follow: the change is lodged with the Master, and the trust’s transparency register is updated (next section).
Keeping the Master’s register current
Since South Africa’s anti-money-laundering reforms, every trust must keep a beneficial-ownership register at the Master and keep it up to date. A trust’s beneficial owners include each founder, each trustee, anyone who controls the trust, and every beneficiary named in the deed — so adding, removing or renaming a beneficiary is precisely the kind of change the register has to capture. The update is made electronically only, on the Master’s Trust Beneficial Ownership Register online system (Chief Master’s Directive 8 of 2023); the Master accepts no paper lodgement.
A trustee must— (a) establish and record the beneficial ownership of the trust; (b) keep a record of the prescribed information relating to the beneficial owners of the trust; (c) lodge a register of the prescribed information on the beneficial owners of the trust with the Master’s Office; and (d) ensure that the prescribed information referred to in paragraphs (a) to (c) is kept up to date.
Note — Inserted by the General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Act 22 of 2022. Note the explicit duty to keep the information up to date — so an amendment that changes the beneficiaries is also a trigger to refile. See beneficial-ownership registers for the company-side CIPC filing as well.
Three ways a trust ends
A trust does not end simply because the trustees decide they are finished with it. It comes to an end in one of three ways, and which one applies dictates the paperwork.
- By the deed’s own terms. Most deeds specify a termination event or date — for example, the death of the last income beneficiary, the youngest beneficiary reaching a stated age (majority in South Africa is 18, under the Children’s Act 38 of 2005), or the fulfilment of the trust’s purpose. When that event happens, the trust falls to be wound up.
- By exhaustion of its assets. Once everything has been distributed and there is no property left to administer, the trust has nothing to hold and is wound up.
- By order of the High Court. Under section 13 (quoted above) a court may terminate a trust where a provision brings about consequences the founder did not contemplate or foresee and which hamper the founder’s objects, prejudice the beneficiaries or conflict with the public interest. Mere inconvenience or impracticality is not the test. The Master can also become involved where there are difficulties in administering or closing it.
A child, whether male or female, becomes a major upon reaching the age of 18 years.
Note — This is why a deed that says “the trust ends when the youngest beneficiary turns 18” takes its meaning from the Act: 18, not 21, is the age of legal majority in South Africa.
However it ends, keep four things apart, because they happen at different times and answer to different people. Substantive termination is the event in the deed, the exhaustion of the assets or the court order. Administration of what remains follows: the trustees pay the trust’s debts, distribute the remaining assets, account properly, deal with the tax on each distribution (next section) and keep the records for five years after termination (s 17). Closing the Master’s file is the third step: the trustees lodge the trust’s final account, surrender the original letters of authority and show that the beneficiaries have received their benefits, and the Master closes the file. A nil bank statement helps, but it does not by itself prove that no asset, debt or tax obligation remains. Under the present Act the trust’s termination is not itself an administrative event — the draft Regulation of Trusts Bill would change that by tying termination to removal from the Master’s register (draft clause 28), but that is a proposal, not current law.
The fourth step is SARS deregistration, which is separate from the Master. SARS requires a trust that has been deregistered with its regulatory authority to finalise all outstanding tax obligations — every ITR12T and IT3(t), and any tax due — before it will deregister the trust for income tax, and administrative penalties can follow for returns that stay outstanding. This is general guidance; confirm the current lodgement requirements with the relevant Master’s Office and the SARS trusts page before you wind up.
What happens to the assets — and the tax on wind-up
On termination the trustees distribute the trust assets to the beneficiaries entitled to them under the deed. That distribution is not tax-neutral, but neither is it automatically a trust-level gain at 36%. Before winding up, classify each asset and each distribution: a cash payment of an amount that already vested in a beneficiary in an earlier year is not a new taxable event; the transfer of an asset whose ownership already vested (a bewind, or an asset vested in specie earlier) is not a fresh disposal by the trust; but vesting an asset in a beneficiary is a disposal for capital-gains-tax purposes, so a gain can crystallise on wind-up. Transferring fixed property to a beneficiary can also attract transfer duty unless a specific exemption applies.
That “vesting is a disposal” point is not a gloss — it is in the statutory definition of a disposal in the Eighth Schedule. The list of what counts as a disposal expressly includes the moment a trust vests an interest in an asset in a beneficiary, which is precisely what a wind-up distribution does.
Subject to subparagraph (2), a disposal is any event, act, forbearance or operation of law which results in the creation, variation, transfer or extinction of an asset, and includes … (d) the vesting of an interest in an asset of a trust in a beneficiary;
Note — Sub-paragraph (d) is the one that bites on a wind-up. Because vesting is itself a disposal, the gain is calculated and taxed even though the trust receives no cash — the asset simply changes hands to the beneficiary.
Who pays that gain is fixed by the Eighth Schedule, not chosen. Where the trust vests the asset in a beneficiary who is a resident, paragraph 80(1) takes the gain out of the trust’s calculation and puts it into the beneficiary’s. Where the trust sells the asset and vests an amount derived from the gain in a resident beneficiary in the same year, paragraph 80(2) does the same. Both are expressly subject to the attribution rules (paragraphs 68, 69 and 71), so a gain that can be traced to a parent’s or founder’s donation goes to that person instead — it is not an election between trust and beneficiary. Only a gain that stays in an ordinary trust — vested in no one, or in a non-resident — is taxed there at the effective 36% (80% inclusion at 45%). Capital losses, by contrast, never pass to a beneficiary. So the way a wind-up distribution is structured, and in whom assets vest, changes the taxpayer and the bill. A donations-tax or estate-duty angle can also arise depending on how value moves, so model the numbers before you distribute.
Capital losses may never be attributed to a beneficiary. Both para 80(1) (vesting of asset in resident beneficiary) and para 80(2) (vesting of capital gain in resident beneficiary) of the Eighth Schedule to the Income Tax Act, 1962, permit only capital gains to be attributed to a beneficiary.
Individuals and Special Trusts 18% … Companies 21.6% … Other Trusts 36%.
Note — “Other Trusts” means an ordinary (non-special) trust — so a gain that stays at trust level on wind-up carries the 36% effective rate, well above the maximum 18% an individual or special trust pays.
[W]here a capital gain is determined in respect of the disposal of an asset by a trust in a year of assessment during which a trust beneficiary . . . has a vested interest or acquires a vested interest (including an interest caused by the exercise of a discretion) in that capital gain but not in the asset, the disposal of which gave rise to the capital gain, the whole or the portion of the capital gain so vested— (a) must be disregarded for the purpose of calculating the aggregate capital gain or aggregate capital loss of the trust; and (b) must be taken into account for the purpose of calculating the aggregate capital gain or aggregate capital loss of the beneficiary in whom the gain vests.
Note — This is paragraph 80(2) as it read for the 2014 to 2016 tax years, quoted by the Constitutional Court in Thistle Trust v CSARS [2024] ZACC 19 at para [4]. The current text is to the same effect for a gain vested in a resident beneficiary but now opens “Subject to paragraphs 64E, 68, 69 and 71” and requires the beneficiary to be a resident — see minor children and attribution for the present wording. Para [4] only sets out that wording; the Court’s holding is at para [63] (reasoning at [51] and [62]): after the 2008 amendment the conduit runs only to the first beneficiary trust — a gain cannot flow through several tiers of discretionary trust to the ultimate beneficiaries.
Frequently asked questions
Yes — but only under a power that exists for that trust. An inter vivos deed is a contract for the benefit of third parties, varied by agreement of the parties to it (usually the founder and trustees, within the amendment clause); beneficiaries who have already accepted benefits may need to consent. A will trust or court-created trust follows the will, the order or s 13 instead. Lodge every amendment with the Master of the High Court — lodgement does not cure an invalid amendment.
Usually yes, where the deed permits it — via an amendment clause the founder and trustees use, or a power the deed gives the trustees to add beneficiaries. Then update the beneficial-ownership register at the Master: every named beneficiary must be recorded as a beneficial owner and kept current.
A trust ends in one of three ways: by its own terms (a date or event in the deed, or once its purpose is fulfilled), by exhaustion of its assets, or by court order. Then keep four steps apart: the termination itself; administering what remains and the tax on each distribution; closing the Master’s file; and SARS deregistration, which needs every return and tax finalised first. A nil bank balance proves none of that.
The trustees distribute the assets to the beneficiaries entitled under the deed — and classify each distribution first. Vesting an asset in a beneficiary is a disposal, so a gain can arise; for a resident beneficiary para 80(1) moves that gain to the beneficiary, and attribution can move it to the founder — the taxpayer is fixed by those rules, not chosen. Paying out an amount that already vested is not a fresh trust-level gain, capital losses never pass through, and fixed property attracts transfer duty unless exempt.
The Master does not grant permission for a valid amendment, but amendments must be lodged with the Master’s Office so the official trust file reflects the current deed — and the Master charges no fee for lodging one. The Master can refuse to register a defective or unauthorised amendment, and trustees may only act under letters of authority — so keeping the lodged record current is essential.