In the Supreme Court of Appeal case, Land and Agricultural Bank of South Africa v Parker, the dilemma of insufficient separation between the control and enjoyment of trust assets came to the forefront.

To address this issue, Cameron JA mentioned, obiter dictum, that the problem at hand may possibly be addressed as follows:

…by insisting on the appointment of an independent outsider as trustee to every trust in which (a) the trustees are all beneficiaries and (b) the beneficiaries are all related to one another.¬†

The Master of the High Court has now taken positive steps to implement the above obiter dictum by issuing a directive in March 2017, which requires that all new trusts registered with the Master, which are so-called family business trusts, must have an independent trustee.

The independent trustee must sign a sworn affidavit in which he/she confirms that he/she has: no family relation or connection, by blood or other, to any of the existing or proposed Trustees, beneficiaries or founder of the trust.

We therefore strongly advise that you choose your independent trustee carefully as he/she will form part of all future decisions made by the trustees.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

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