What We Do

Statutory Services

 

  • New Trust Deed creation and registration
  • Trust deed amendments
  • Letter of Authority - request copies or request amendments
  • Trustee resignations and appointments
  • Account changes

Trust Accounting and Tax

  • Asset Register
  • Audit trial backed up with resolutions and minutes
  • Reconciling of Financial statements, ITR12T, IT9t), Beneficial Ownership (SARS register)
  • Real-time trust financial information

Trust Administration and Compliance

  • Trust deed execution
  • Trustee meetings, minutes, resolutions
  • Beneficial Ownership register
  • Audit trails
  • Trust Property Control Act compliance
  • All administration managed on the Trusteeze platform

Independent Trustee Services

  • Acts as Independant trustee in line with the Chief Master's directive of 2017

  • Ensures adequate seperation of control from enjoyment of trust assets and accruals

  • Ensure that provisions in the trust instrument are observed
  • Scrutiny of the conduct of trustees who do not observe the provisions of the trust instrument

Managing assets can be a daunting task, especially when it’s related to estate planning.

Trusts are an essential part of this process, offering a flexible way to distribute assets to benefit an individual’s chosen beneficiaries.

The administration of a trust involves many complicated duties and responsibilities.

Auxilium Consulting and Trust Services administers these complexities of trust creation and administration on the Trusteeze platform.

 

The Trust Property Control Act 57 of 1988 defines a trust as a legal arrangement through which the ownership in property of one person is, by virtue of a trust instrument, made over or bequeathed

  1. To another person, the trustee…to be administered or disposed of according to the provisions of the trust instrument for the benefit of the person… designated in the trust instrument; or

 

    b. To the beneficiaries designated in the trust instrument, which property is placed under the control of another person, the trustee… for the achievement of the object stated in the trust instrument

  • Protect your assets while you are alive – separate your personal from your business assets; assets owned by a trust do not form part of an insolvent estate and cannot be attached by creditors
  • Enjoy the fruits of your work while you are alive – a well-structured trust and proper tax planning may result in tax advantages, e.g. through distributions to minor children
  • Flexibility for varying circumstances and events – a discretionary trust is flexible enough to take into account any change in family, financial and legislation and to adjust accordingly
  • Family asset management – a trust can provide a centralised asset management structure with controlled distributions to beneficiaries who may not be in the best position to manage their own financial affairs. A trust is also very popular for joint ownership of indivisible assets such as family holiday homes and farms
  • “Insurance” should something go wrong with your mental or physical health – with pro-active planning, a person who may become physically or mentally compromised, may have their affairs looked after by a board of trustees instead of being placed under curatorship. The Income Tax Act also makes provision for Special trusts (created for a person who cannot take care of their personal affairs) with specific tax benefits
  • Preserve your wealth for future generations; create your legacy! -a well-managed trust allows succeeding generations to participate in and benefit from the wealth generated by preceding generations.
  • Protect other people – e.g. parents may wish to provide for the future of children with special needs who may not be able to generate an income or manage their own affairs
  • No estate freezing -An individual’s estate is frozen upon their death and it may take 2-3 years to finalise an estate. In the case of a trust, death does not disrupt the operation of a trust
  • Protect your family from hardship caused by lack of liquidity resulting from your death – In a trust, Capital Gains Tax is only triggered upon distribution or sale of assets and not upon any individual’s death. Estate Duty and Executor’s fees will never be payable on assets in a trust

The following are the main role players involved in a trust: 

  • Founder or Donor: Also called a settlor, the founder is the party that places property or some other form of transferable assets, like cash, investment accounts and life insurance policies, into a trust account. 

  • Trustee: This party is an individual or organization that administers the trust. Trustees can be friends, family members, providers of trust management services, attorneys, etc.

  • Beneficiary: This party is an individual or organization intended to receive either income from the trust or the assets themselves, depending on the terms of the trust. 

It is important to understand that these roles may overlap. For instance, the founder can also serve as a trustee. 

When the trust is registered, the founder transfers assets to the Trust and the assets legally belong to the trust.

Trustees have a legal duty to manage the assets productively for the benefit of the beneficiaries while following the provisions of the trust instrument. This means the trustee must manage trust assets with care and diligence. To do otherwise would result in a breach of fiduciary duty and serious legal consequences for the trustee. 

A trustee may receive payment to compensate them for their work in managing and administering a trust. Depending on the terms of the trust instrument, the renumeration may or may not come from the income of the trust account. 

 

Trust administration refers to managing and distributing assets held in a trust. As discussed previously, the trustee is responsible for trust administration, which involves overseeing the trust and ensuring that assets are managed and distributed following the terms of the trust document and applicable laws. 

When initiating a trust, it’s essential to list all property, financial accounts and other assets included in the trust. Inventorying them helps ensure an accurate record for transparency as well as for documentation and legal purposes. 

Additionally, ensuring the trust assets are held by appropriate custodians is crucial to the administration process. This might involve titling property in the name of the trust or opening accounts under the trust’s name.

The trustee must make sound investment decisions with the trust’s assets to protect and grow their value. This includes considering the beneficiaries’ needs and risk tolerance while adhering to the trust’s long-term objectives.

The trustee must thoroughly understand and comply with the trust’s terms and provisions, including any restrictions on asset management, the specific needs and goals of the beneficiaries and any required distributions.

The trustee is responsible for making distributions in compliance with the trust’s terms. This may involve setting up:

  • Ongoing income distributions to beneficiaries
  • Distributions for specific purposes, like healthcare and education expenses
  • Distributions that meet certain age or event conditions

Trust administration involves keeping up with and managing the trust’s required tax filings. The trustee is responsible for ensuring that the trust abides by all applicable tax laws, including paying necessary taxes based on income and allowable deductions.

Accurate and timely record keeping is essential to maintain the integrity and efficiency of the trust. The trustee must keep financial records for the trust, including account statements, invoices, receipts, tax documents and any other documentation related to the trust’s assets and transactions. Good record keeping helps ensure transparency between the trustee and beneficiaries and simplifies the process of satisfying legal requirements.

To monitor the performance of the investments and ensure the trust’s goals are met, the trustee should track the progress of the trust’s assets regularly. This includes monitoring the growth of investments and determining if changes need to be made to meet the beneficiaries’ needs or the trust’s objectives.

In case of an amendment to the trust or a change in trustee, the trustee must properly document these changes. Doing so helps ensure all parties involved in the trust are updated on any modifications made within it.

A trustee is legally obligated to act on behalf of the beneficiaries, which requires good faith, honesty, loyalty, and diligence – all of which fall within the trustee’s fiduciary duties. These duties include the following:

As the entrusted party, the trustee’s actions must prioritize the best interests of the beneficiaries above all else.

When managing trust assets, a trustee must exercise the same level of care, skill and prudence that a reasonable individual would under similar circumstances. This includes diversifying investments and seeking professional advice when needed.

Trustees must keep beneficiaries up to date on their activities and maintain transparency in managing the trust. This may include providing regular updates or accounting and promptly responding to inquiries from beneficiaries.

In addition to their general fiduciary duties, trustees are strictly prohibited from engaging in “self-dealing” or transactions that may benefit them personally.

Self-dealing occurs when a trustee uses their position for personal gain, directly or indirectly, at the expense of the trust and its beneficiaries. Examples may include purchasing trust-owned property for personal use, borrowing from trust funds or arranging personal investments through the trust.

Trustees found guilty of self-dealing may face civil or criminal penalties and could be required to reimburse the trust for any losses incurred due to their actions. The court may also remove the trustee and appoint a successor to ensure the trust’s proper administration.

Trust Administration Challenges and Potential Issues

Trust administration is a complex process, and it can be even more challenging due to situations such as the following:

Dealing with disagreements between beneficiaries is a common challenge in trust administration. The trustee should encourage conversations and help find a solution that upholds the trust’s intentions while preserving beneficiary relationships.

To resolve these disputes, the trustee must keep lines open with all beneficiaries and encourage dialogue. Good communication and interpersonal skills, as well as patience and empathy, are essential for trustees to mediate conflicts effectively. 

Sometimes, beneficiary disputes may lead to legal action. When this happens, the trustee must collaborate with attorneys to ensure the trust’s best interests are represented in court. This means that trustees need to have a solid understanding of trust, estate and tax laws as well as the fiduciary duties associated with trust administration.

While trustees should try to avoid legal action whenever possible, they must be prepared to navigate the legal process if disputes cannot be resolved amicably. This may involve gathering necessary documentation, providing expert testimony and closely collaborating with legal counsel.

 

While a trust is typically designed with specific objectives in mind, adjustments may be required over time to ensure the trust continues to meet the beneficiaries’ needs. Trust modification allows trustees to adjust the trust’s provisions in these situations.

When circumstances change, the trustee must decide whether a trust modification is called for and whether it’s in the best interests of the beneficiaries. In some cases, this may involve obtaining court approval or agreement from all or most beneficiaries. 

Once a trust has served its intended purpose, the trustee must distribute all assets to beneficiaries and address any outstanding obligations. These may include final income tax preparation, liquidation of assets, payment of taxes or debts and obtaining required legal releases from beneficiaries. The trustee must ensure that all legal and fiduciary obligations associated with the trust are fulfilled before the termination is complete.

As the previous sections have shown, the role of a trustee is vital, as they are responsible for safeguarding the trust’s integrity and ensuring its success. The trustee significantly impacts the trust’s ability to grow its assets and achieve its goals as laid out by the grantor. 

For this reason, special care must be taken when choosing a trustee. Generally, however, most people choose friends or family members they see as trustworthy, responsible and willing to take on the responsibility. 

Generally, however, the average person does not have extensive experience in financial management, legal matters or the tax implications of trusts. Professional guidance–such as from trust administration companies and trust administration lawyers–can help ease the burden for people who find themselves in the role of trustees. 

Whether you choose a family member, friend, or professional as your trustee, there are many advantages to hiring atrust administration laywer. 

Trust administration can be time-consuming and complex, especially for individuals not well-versed in the process. A trust administration lawyer can help to guide your trustee through the legal and financial responsibilities associated with the role, ensuring that they effectively administer your trust.

Trustees must adhere to a variety of federal and state laws and regulations. A trust administration lawyer can help your trustee navigate these complex rules and ensure your trust is administered according to the latest legal requirements.

Trustees are held to a high standard of care and can be held personally liable for mistakes or mismanagement. Hiring a trust administration lawyer can provide your trustee with valuable guidance and protection, helping minimize potential risks or liabilities.

Trust administration is a complex process that requires a thorough understanding of trust law, tax implications and financial management. Wiles Law is here to help. 

Our full-service estate, tax and trust planning law firm has a team of attorneys with extensive experience in trust administration matters. Whether you’re a newly named trustee or an individual considering initiating a trust, you can rely on us to provide you with the information, resources and guidance you need to navigate the complexities of trust administration confidently.