The Responsibilities of Trustees: A Complete Guide

Trusts are one of the most powerful tools available for estate planning, asset protection, and long-term wealth management in South Africa. They allow families and business owners to structure their assets in a way that provides continuity, flexibility, and security. At the heart of every trust, however, lies one critical role: the trustee.

Trustees are the custodians of the trust — they hold legal title to the trust’s assets, but not for their own benefit.

Instead, they manage and administer those assets on behalf of the beneficiaries in line with the trust deed and the law.

This is a position that carries both legal obligations and significant responsibilities.

In this article, we’ll take an in-depth look at:

• The key duties and responsibilities of trustees

• The legal framework governing trustees in South Africa

• The difference between independent and non-independent trustees

• Common challenges trustees face and how to navigate them

• Practical examples of trustee responsibilities in action

• How MMT Financial Services supports clients with trusts, trustee services, and compliance

By the end, you’ll have a clear understanding of what it means to be a trustee, why independent trustees are often required, and how to ensure compliance while protecting the interests of beneficiaries.

1. The Role of a Trustee

A trustee is the person (or persons) appointed in the trust deed who assumes control of the trust’s assets and manages them for the benefit of the beneficiaries. This role requires absolute integrity, accountability, and compliance with fiduciary duties.

The essence of trusteeship is fiduciary responsibility — trustees must always act in the best interest of the beneficiaries and never in their own personal interest. Unlike a company director who makes decisions to grow shareholder value, trustees must administer the trust solely for the purposes stated in the trust deed.

Key principle: Trustees are not owners of the trust property in the usual sense. The trust is a separate legal entity, and trustees are merely administrators and custodians.

2. The Legal Framework for Trustees in South Africa

Trusteeship in South Africa is primarily governed by:

• The Trust Property Control Act 57 of 1988

  • Sets out the powers and duties of trustees.

  • Requires trustees to act with the care, diligence, and skill that can reasonably be expected of a person managing the affairs of another.

• The common law of trusts

  • Establishes fiduciary duties such as loyalty, impartiality, and accountability.

• The trust deed

  • The founding document of a trust, which sets out the specific powers, limitations, and obligations of trustees in that particular trust.

Before a trustee can act, they must receive Letters of Authority from the Master of the High Court, confirming their appointment. Acting without these letters is unlawful and can result in personal liability.

3. The Core Responsibilities of Trustees

Trustee responsibilities can be grouped into key categories:

3.1 Fiduciary Duties

• Act honestly, transparently, and with integrity.

• Avoid conflicts of interest.

• Place the interests of beneficiaries above personal gain.

3.2 Administrative Duties

• Keep proper accounting records.

• Submit annual financial statements for the trust.

• File required tax returns with SARS.

• Ensure compliance with relevant laws and regulations.

3.3 Asset Management

• Manage trust property prudently.

• Make investment decisions that balance risk and return.

• Protect and grow trust assets where appropriate.

3.4 Beneficiary Relations

• Act impartially between beneficiaries.

• Distribute income or capital in line with the trust deed.

• Communicate with beneficiaries regarding trust affairs.

3.5 Compliance Duties

• Ensure the trust complies with SARS requirements.

• Keep the trust’s beneficial ownership records up to date.

• File returns and disclosures with the Master of the High Court.

At MMT Financial Services, we assist trustees by preparing financial statements, filing SARS returns for trusts, and ensuring that all compliance obligations are met. We also guide trustees through their duties, making administration efficient and stress-free.

4. Independent vs. Non-Independent Trustees

The distinction between independent and non-independent trustees has become increasingly important in South Africa due to concerns about abuse of trusts for tax avoidance or concealment of ownership.

4.1 Independent Trustee

An independent trustee is:

• Someone with no direct interest in the trust or its assets.

• Not a beneficiary, nor a close family member of the founder or beneficiaries.

• Appointed to provide oversight, ensure transparency, and protect against mismanagement.

• Often a professional (lawyer, accountant, fiduciary practitioner).

The Master of the High Court generally requires at least one independent trustee when a trust is set up for estate planning purposes, especially if the beneficiaries are related to the founder.

Example:Mr. M sets up a family trust and appoints his wife and brother as trustees. The Master requires an independent trustee — such as a qualified accountant from MMT Financial Services — to ensure that decisions are not made solely for the family’s benefit without oversight.

4.2 Non-Independent Trustee

A non-independent trustee is:

• Typically a family member, beneficiary, or close associate of the trust founder.

• Directly involved in the family’s affairs.

• May have a personal stake in the trust assets.

While non-independent trustees play an important role in understanding family needs and intentions, the lack of independence can create conflicts of interest. This is why an independent trustee is often required.

5. What Happens If Trustees Fail in Their Duties

The consequences of trustee misconduct or negligence can be severe:

• Personal Liability: Trustees can be held personally liable for losses caused by their actions.

• Removal by the Court: The Master or a court can remove a trustee who breaches their duties.

• SARS Penalties: Failure to file trust returns can lead to penalties and interest.

• Beneficiary Claims: Beneficiaries can sue trustees for damages if they act improperly.

Example:A trustee fails to file annual tax returns for a trust, resulting in penalties of R50,000 from SARS. Because the trustee neglected their duty, they may be held personally liable. This risk is why many families rely on MMT Financial Services to handle trust compliance.

6.Practical Examples of Trustee Responsibilities

Example 1: Investment Decision

A trust holds R2 million in assets. Trustees must decide whether to invest in property or stocks. They must weigh risks, consult professional advice, and ensure decisions align with the trust deed.

Example 2: Distribution Conflict

One beneficiary wants an early distribution, while another prefers reinvestment. Trustees must act impartially and base their decision on the deed, not personal preferences.

Example 3: Compliance Oversight

A family forgets to update their beneficial ownership register. The independent trustee (appointed from MMT) identifies the gap and ensures it’s corrected to avoid penalties.

7. How MMT Financial Services Supports Trustees

At MMT Financial Services, we:

• Act as independent trustees for family and business trusts.

• Prepare trust financial statements and file SARS trust returns.

• Maintain beneficial ownership records in line with CIPC requirements.

• Provide professional guidance on trust administration.

• Assist with estate planning to ensure the trust functions as intended.

Our expertise helps families avoid compliance pitfalls while ensuring that trusts operate smoothly and effectively.

Being a trustee is far more than a ceremonial title. It is a role that carries significant legal, financial, and ethical responsibilities. Trustees are custodians of trust assets, protectors of beneficiaries’ interests, and stewards of compliance.

The distinction between independent and non-independent trustees is critical in ensuring transparency, fairness, and accountability. Independent trustees, often professionals like those at MMT Financial Services, play a vital role in preventing abuse and safeguarding the trust’s integrity.

Whether you are setting up a new trust, serving as a trustee, or considering estate planning, it is essential to understand these responsibilities fully. And if the weight feels heavy, you don’t have to carry it alone — at MMT Financial Services, we’re here to guide you every step of the way