Trusts are flexible and there is a relative lack of formality in their creation and operation. Trustees and Beneficiaries should be aware that the leeway provided by the wording of the trust deed does not absolve them of the need for accountable administration.

In a recent judgement, Land and Agricultural Bank of South Africa v Parker and others

[2004] 4 All SA 261 (SCA), the Supreme Court of Appeal found that the trust did not have a separate identity where the assets of the trust included the family home, furniture and other personal items.

Enjoyment and control of the trust assets must be separate or the essential notion of trust law is debased. The judges suggested that the Master should ensure that for every trust:

  • There must be an independent outsider as trustee
  • The outsider must be someone with a proper understanding of the responsibilities of trusteeship
  • The conduct of the trustees should be scrutinised to ensure that all procedural requirements of the trust deed are met.

The duties of trustees are derived from the principle of separation of enjoyment and control and when drafting a trust deed or performing the functions of a trustee; care should be taken to ensure that the trust is not an alter ego of the founder or a trustee.