You may have agreed to act as a trustee, perhaps motivated by loyalty or a sense of duty. By now you’ve likely realised that South Africa’s grey listing triggered a storm of regulatory enforcement. Your role as trustee has now become a minefield – none of which you initially signed up for. Trustees inadvertently tend to neglect their obligations, which will leave them open to attack with drastic consequences, especially after the recent legislation changes.
Where do the risks lie?
You are exposed on two fronts:
1. Statutory compliance
1.1. Trust Property Control Act (TPCA)
For the first time, TPCA introduces significant penalties for non-compliance – including fines of up to R10-million and/or imprisonment for up to five years – even for what may appear to be minor oversights. In addition, onerous data recording and reporting requirements have been implemented, with an obligation to report timeously to the Master and other relevant authorities.
1.2. South African Revenue Service (SARS)
Furthermore, it is now undoubtedly clear that a focus area of SARS is non-compliance of trusts and therefore all trustees are urged to ensure the trusts on which they serve as trustees are compliant. The increased disclosure obligations and increased audit intensity by SARS will result in higher compliance time and, therefore, costs to effectively manage a trust. Layer in SARS’s growing integration with the Master’s Office and real-time AI cross-checking; this is no longer just paperwork.
1.3. Financial Intelligence Centre (FIC)
In many cases, trustees are unaware that they qualify as an accountable institution – providing services (advising, accounting and administrative functions) to a trust may classify them as a trust service provider. This means they face serious and escalating legal risks from FIC, which is armed with new enforcement powers. Fines of R10-million to R50-million or even 15 years’ imprisonment are on the table. If you’re still treating trust administration as an afterthought, you and your clients are exposed.
2. Fiduciary liability
This is not new, but trustees are increasingly being sued. Messy divorces, disgruntled beneficiaries or even third parties like banks are turning to trustees for recourse, often targeting the one with the deepest pockets, which could be you. You can be held personally liable, even for what seems like minor negligence, like signing a resolution you didn’t fully understand. Worse still, you can’t control the actions of your co-trustees, even though you could be jointly liable. You cannot afford to be passive or a “puppet” trustee – signing resolutions without understanding or, worse, disengaging entirely. Negligence includes not knowing what you ought to know.
So, what are your options?
You could resign, but who would want to take your place? How do you balance compliance and manage legal obligations while ensuring a good night’s sleep? That’s exactly what we offer.
Mella Fiduciary provides a professional, behind-the-scenes trust administration solution that removes the administrative and legal stress from your role as trustee no matter where you are in the country. You can remain a trustee with confidence, knowing your compliance is taken care of – or, if preferred, appoint us as independent trustees and step away from the risk.
Mella Fiduciary offers a full trust administration service:
- Trust deed health check and amendments
- Trust financials and submission of tax returns
- Regular, professional communication with client’s family
- Full compliance
- Cutting-edge technology-enabled delivery
In addition to trust administration, Mella Fiduciary also administers deceased estates. We apply the same disciplined approach to deceased estate administration. Our team manages the entire process quietly, professionally and we ensure your client remains connected to you throughout the process. Our goal is to make you look good in front of your clients.
Conclusion
By partnering with Mella Fiduciary, you stay in the client’s inner circle – but offload the risk and paperwork to professionals who live and breathe fiduciary administration. Our business exists to support financial planners and wealth managers, not compete with them. We manage the complexity, so you can stay focused on what matters most.
