Trust FAQ South Africa: 20 Questions Answered

A trust is a legal arrangement in which one person (the founder) transfers assets to one or more trustees to hold and administer for the benefit of one or more beneficiaries. In South Africa, trusts are governed principally by the Trust Property Control Act 57 of 1988, which regulates the conduct of trustees and protects trust beneficiaries. The trust is not a separate legal person like a company, but it does have a distinct legal identity recognised by the courts and the South African Revenue Service. Trusts are widely used in South Africa for estate planning, asset protection, and the holding of immovable property across generations.

Learn more in our comprehensive guide to trusts in South Africa.

The primary statute is the Trust Property Control Act 57 of 1988 (TPCA), which imposes duties on trustees, requires registration with the Master of the High Court, and provides beneficiaries with rights of enforcement. The Income Tax Act 58 of 1962 governs the taxation of trusts and their beneficiaries, including the conduit principle under section 25B and the anti-avoidance attribution rules under section 7. The Administration of Estates Act 66 of 1965 applies to testamentary trusts administered through deceased estates. The common law of trusts, rooted in Roman-Dutch legal tradition, supplements these statutes and governs matters not expressly regulated by legislation.

An inter vivos trust (also called a living trust) is created during the founder's lifetime, typically by means of a trust deed signed before a notary public and registered with the Master of the High Court. A testamentary trust, by contrast, is created in a person's will and only comes into existence upon their death when the estate is administered. Inter vivos trusts are most commonly used for estate planning and asset protection, while testamentary trusts are often used to provide for minor children or financially dependent family members after the founder's death. The two trust types are taxed and administered differently: inter vivos trusts are taxed at the flat rate applicable to trusts (currently 45%), while testamentary trusts created for the benefit of minors or incapacitated persons may qualify as "special trusts" under the Income Tax Act and be taxed at individual rates.

Read our full article on inter vivos trusts in South Africa.

Yes. Although a trust is not a juristic person in the way that a company is, it is recognised as a legal entity capable of owning immovable property, holding bank accounts, entering into contracts, and litigating. When immovable property is transferred into a trust, it is registered in the Deeds Office in the names of the trustees in their official capacity — for example, "A Smith and B Jones NO in their capacity as trustees of the ABC Family Trust." Transfer duty is payable on the transfer of property into a trust unless the transaction qualifies for a specific exemption. The trust deed will govern how the property may be dealt with and what authorisations are required from the trustees.

See our guide on holding property in a trust.

Setting up an inter vivos trust begins with the drafting of a trust deed by a qualified attorney. The deed is then signed by the founder and all initial trustees before a notary public, or alternatively in the presence of two witnesses. The signed trust deed, together with the prescribed application form and supporting documents, is lodged with the Master of the High Court in whose jurisdiction the trust will be administered. The Master examines the deed and, if satisfied, issues Letters of Authority authorising the trustees to act. Only after Letters of Authority have been issued may the trustees lawfully administer the trust and transact in its name.

See our step-by-step guide on how to set up a trust in South Africa.

Any person over the age of 18 who is of sound mind and not an unrehabilitated insolvent may act as a trustee. The Trust Property Control Act 57 of 1988 does not prescribe formal qualifications for trustees, but trustees must be fit and proper persons capable of carrying out their fiduciary duties with the care, diligence, and skill required by section 9 of the Act. A company or close corporation may also act as a trustee. Since 2021, the Master of the High Court requires the appointment of an independent trustee — a person who is not a beneficiary and who is independent of the founder and other trustees — to guard against abuse and self-dealing. Attorneys, accountants, and trust companies commonly serve as independent trustees.

Read more about trustee duties and responsibilities.

Registration timelines vary significantly depending on the Master's Office in whose jurisdiction the trust is administered and the current workload of that office. As a general guideline, registration at the Johannesburg Master's Office takes approximately 4 to 8 weeks after all documents have been lodged in proper order. Other Master's Offices across the country may be faster or slower. Delays are common where documents are incomplete, where requisitions are raised, or where there is a high volume of pending matters. Practitioners can follow up on the status of a lodged trust application at the relevant Master's Office.

The Master of the High Court is the government official responsible for the registration and supervision of trusts in South Africa under the Trust Property Control Act 57 of 1988. Every inter vivos trust must be registered with a Master's Office, and the Master issues Letters of Authority that authorise the trustees to act on behalf of the trust. The Master has the power to investigate trustee conduct, receive complaints from beneficiaries, call for accounts and documents, and take steps to protect trust assets where trustees are acting improperly. The Master also keeps a register of trusts, which is publicly accessible. Trustees must report changes to trustee composition and trust details to the Master.

The cost of setting up an inter vivos trust consists primarily of the attorney's professional fees for drafting the trust deed and the Master's Office registration fee, which is currently R100. Attorney's fees for a standard trust deed typically range from approximately R5,000 to R15,000 inclusive of VAT, depending on the complexity of the deed and the firm engaged. Notarial fees are payable if the deed is executed before a notary public, though this is not a strict requirement for all trusts. Additional costs arise when immovable property is transferred into the trust — transfer duty, conveyancing fees, and Deeds Office registration fees will apply to that transaction separately.

See our detailed breakdown of trust costs and fees in South Africa.

Inter vivos trusts are taxed at a flat rate of 45% on taxable income retained in the trust, under the Income Tax Act 58 of 1962. This is the highest marginal rate applicable to any taxpayer in South Africa. However, under the conduit principle in section 25B of the Act, income and capital gains that are distributed to beneficiaries in the same year they arise are taxed in the hands of the beneficiaries at their own applicable rates, which may be significantly lower. A "special trust" — defined in section 1 of the Act as a trust created solely for the benefit of a person with a disability, or a testamentary trust for the benefit of minor relatives — qualifies for the progressive individual tax tables rather than the flat 45% rate.

Yes, transfer duty is generally payable when immovable property is transferred into a trust, based on the value of the property, in terms of the Transfer Duty Act 40 of 1949. There is no blanket exemption for transfers into trusts. However, where the founder transfers property to a trust of which they are both a trustee and the sole beneficiary, SARS may argue that no change of beneficial ownership has occurred, but this is a complex area requiring specialist advice. VAT may apply instead of transfer duty where the seller is a VAT vendor and the property forms part of a taxable supply. Conveyancing fees and Deeds Office registration fees are payable in addition to transfer duty.

Read our full guide on transferring property into a trust.

Donations tax is levied at 20% on the value of property gratuitously transferred to any person, including a trust, by a natural person who is a South African resident. Where the cumulative value of donations in a tax year exceeds R30 million, the rate increases to 25% on the excess. Section 56(2)(b) of the Income Tax Act 58 of 1962 provides an annual exemption of R100,000 per donor, meaning that the first R100,000 of donations in each tax year is exempt from donations tax. Donations to a spouse, a public benefit organisation, or certain political parties are fully exempt. Loans to a trust are not donations for this purpose, but section 7C of the Income Tax Act provides that interest-free or low-interest loans to related trusts give rise to a deemed donation.

Trustees are fiduciaries and are subject to stringent duties under the Trust Property Control Act 57 of 1988 and the common law. Their core duties include acting in the best interests of beneficiaries, keeping trust property separate from their personal assets, maintaining proper accounting records and bank accounts in the trust's name, acting with the care, diligence, and skill of a reasonably competent person, and avoiding conflicts of interest. Trustees must act collectively unless the trust deed permits delegation. They must also file annual income tax returns with SARS on behalf of the trust and ensure that the trust complies with FICA obligations. Breach of fiduciary duty can give rise to personal liability for loss suffered by the trust.

Read our full guide on trustee duties and fiduciary obligations.

An independent trustee is a trustee who is not a beneficiary of the trust and who is independent of the founder and other trustees in the sense that they are not connected to them by family or business relationships. Since 2021, the Master of the High Court has refused to register trusts or issue Letters of Authority unless an independent trustee is appointed, following concerns about widespread abuse of trusts and the use of trusts as alter egos. The independent trustee serves as a check on the conduct of the other trustees and must independently apply their mind to all trust decisions. Attorneys, chartered accountants, and professional trust companies are commonly appointed as independent trustees.

Yes, the founder of an inter vivos trust may also be appointed as a trustee, and this is in fact the most common arrangement in practice. The founder typically drafts the trust deed, transfers assets to the trust, and then serves as a co-trustee alongside the other appointed trustees. However, the founder-trustee cannot act alone — they must act jointly with the other trustees in accordance with the trust deed and the provisions of the Trust Property Control Act 57 of 1988. Courts have consistently held that where the founder exercises unilateral control over the trust as if it were their own property, the trust may be found to be a sham and the assets treated as forming part of the founder's personal estate.

Learn more in our guide to how an inter vivos trust works.

Whether all trustees need to sign depends on what the trust deed provides. Most well-drafted trust deeds require all trustees to act unanimously on major decisions — such as the acquisition or disposal of immovable property, the making of distributions to beneficiaries, and the amendment of the trust deed — but permit a majority to act on day-to-day administrative matters. A resolution signed by all trustees is typically required for property transactions and opening of bank accounts. Where the trust deed is silent, section 9 of the Trust Property Control Act 57 of 1988 requires trustees to act jointly. Third parties dealing with a trust should always insist on a certified copy of the Letters of Authority and a trustee resolution authorising the specific transaction.

Any natural or juristic person — including minor children, companies, other trusts, and charitable organisations — can be named as a beneficiary of a trust. Beneficiaries may have vested rights (an unconditional entitlement to trust income or capital) or discretionary rights (an entitlement subject to the exercise of discretion by the trustees). The trust deed typically specifies the class of beneficiaries and defines what rights they hold. An unborn child may be named as a contingent beneficiary, and their interest will vest upon birth. The founder and trustees are not precluded from also being beneficiaries, subject to the requirement that at least one independent trustee is appointed.

See our guide to trust beneficiaries in South Africa.

Where a beneficiary holds a vested right to specific trust assets, those assets may in principle be attached by the beneficiary's creditors. However, where the trust deed confers only discretionary rights on beneficiaries — meaning the trustees may, but are not obliged to, make distributions — the courts have generally held that the mere spes (expectation) of a beneficiary cannot be attached by a creditor. This is one of the key asset-protection features of a discretionary trust. It is important to note that where a founder has effective control over trust assets and the trust is found to be a sham, those assets may be included in the founder's insolvent estate under the Insolvency Act 24 of 1936.

Learn more in our comparison of trust vs company for asset protection.

Under the conduit principle in section 25B of the Income Tax Act 58 of 1962, income distributed by a trust to beneficiaries retains its character in the beneficiary's hands. For example, rental income distributed to a beneficiary is taxed as rental income in that beneficiary's personal tax return, and capital gains distributed are taxed as capital gains in the beneficiary's hands (subject to the beneficiary's annual exclusion). For this treatment to apply, the distribution must be made in the same year of assessment in which the income arose and must be vested in the beneficiary. Income not distributed or vested in beneficiaries in that year is taxed in the trust at the flat rate of 45%. The attribution rules in section 7 of the Act may override the conduit principle in certain circumstances, particularly where the founder has retained effective control.

Yes, a trust can be terminated in several ways. First, the trust may terminate in accordance with the provisions of the trust deed itself — for example, upon the occurrence of a specified event or upon the expiry of a defined period. Second, the trustees and all beneficiaries may collectively agree to terminate the trust and distribute the assets. Third, a court may order the termination of a trust where it is just and equitable to do so, for example where the trust's purpose has become impossible to fulfil. Upon termination, the Master of the High Court must be notified and the Letters of Authority surrendered. Any immovable property held in the trust name must be transferred out of the trust by a conveyancer, with transfer duty and conveyancing costs payable on any such transfer.

Read our full guide on amending or terminating a trust.