Trusts & Their Property

People choose trusts for property for a variety of practical reasons. The most compelling is asset protection: property held in a trust does not form part of the personal estate of the trustee, which means that if a trustee's personal finances collapse — think sequestration or a business judgment — the trust property is generally shielded from those personal creditors. It belongs to the trust, not to the individual.

A trust must always involve at least three distinct parties: a founder, at least one trustee, and at least one beneficiary. Importantly, the founder cannot remain the sole owner of the trust assets — otherwise it would not really be a trust at all. The founder may, however, serve as a co-trustee or as a beneficiary alongside others, as long as there are genuine independent elements.

In South Africa, all trusts created after 31 March 1989 are regulated by the Trust Property Control Act 57 of 1988. This Act sets out who may act as trustee, what authority they need, what documents must be lodged with the Master of the High Court, and what happens when things go wrong. It is a comprehensive piece of legislation and conveyancers deal with it on a daily basis.

An inter vivos trust — literally "between the living" — is established while the founder is still alive. It comes into being through a written trust deed, which is a contract between the founder and the initial trustees setting out the terms on which the trust property will be managed. This is by far the most common type of trust used in South African property transactions.

Once the trust deed is drawn up, it must be lodged with the Master of the High Court, who allocates a unique trust number to it. For inter vivos trusts, all registrations from 15 September 2014 onwards carry a suffix that identifies which Master's office holds the record — for example, a Pretoria trust might be numbered IT 3789/2009/P, while a Cape Town trust might carry a /CPT suffix. This suffix is important and must appear on all transfer documents and deeds lodged at the Deeds Office.

A mortis causa trust (or testamentary trust) is born out of a will. It comes into existence only on the death of the person who wrote it. The most common scenario is where a testator leaves property to minor children but directs that the property be held in trust until the children reach a certain age — say, 21 or 25 years old.

The handling of property in a testamentary trust is quite different from the normal sale-and-transfer process. The property is not transferred to the trust by a deed of transfer in the ordinary sense. Instead, once the estate has been administered and the liquidation and distribution account has been approved, the executor causes the terms of the will to be endorsed onto the title deed of the property. This special note — known as a section 40(1)(b) endorsement — signals to the world that the trustees now have the right to administer the property in accordance with the will.

When that eventual transfer from the trust to the beneficiaries takes place, it must be done by a conventional deed of transfer in the normal way. At that point, transfer duty (or an exemption certificate if applicable) must also be lodged.

South Africa's property market attracts buyers from across the globe, and some of those buyers operate through trusts established in foreign jurisdictions. Whether it is a British family trust, a Channel Islands structure, or an offshore discretionary arrangement, the rules for dealing with South African immovable property are clear and non-negotiable.

Before a foreign trust can have immovable property registered in its name in South Africa — or have a mortgage bond registered in its favour — two requirements must be satisfied:

Property law is famously precise about how parties are identified in deeds. Get the description of a trust or its trustees wrong, and the Deeds Office will reject the documents. Conveyancers are trained to navigate this carefully, and there is an important difference between how a trust is described in the power of attorney versus how it appears in the actual deed of transfer.

One of the questions that comes up most frequently in trust transfers is simple on its face but surprisingly nuanced in practice: does every trustee need to sign every document? The general principle is yes — but there is an important and common exception.

A very practical point worth noting: the conveyancer is responsible for checking the trust deed to understand the decision-making rules it sets out. Some trust deeds allow for decisions by majority vote; others require unanimity. Some allow a single authorised trustee to act alone; others do not. The trust deed governs — and a conveyancer who does not check it is not doing their job properly.

No discussion of trusts and property is complete without understanding the central role of the Master of the High Court and the document that unlocks a trustee's power to act: the Letters of Authority (also called the Letter of Authorisation or Letter of Appointment).

Section 6(1) of the Trust Property Control Act states plainly that a trustee may only act in that capacity if authorised to do so in writing by the Master. This is not a procedural formality. It is a fundamental threshold requirement. Any action taken by a would-be trustee before those letters have been issued is null and void from the outset — and it cannot be fixed later by ratification, whether by the other trustees, by the Master, or even by a court.

One of the genuine practical advantages of a trust is that it does not depend on the continuing participation of any particular individual. When a trustee dies, becomes incapacitated, resigns, or is removed, the trust itself carries on. But the transition must be managed in a specific, legally prescribed way.