In terms of the Trust Property Control Act 57 of 1988, persons who have been appointed as Trustees in terms of a trust instrument or by Court are only legally authorised to act in that capacity once they have been formally appointed by the Master of the High Court. To be appointed by the Master as a Trustee, he/she has to make application to the Master who will issue a document known as Letters of Authority. No Trustee has powers or may commence administration of any trust property prior to obtaining such written authority of the Master.
There are various types of trusts which can be created, each suited to a specific set of circumstances, and examples include:
The Master does not grant authority to the Trustee unless he/she has furnished security to his satisfaction for the due and faithful performance of his/her duties as Trustee or he /she has been exempted from furnishing security by court order or the Master.
Where Trustees are required to furnish security, they will be requested to provide a security bond also known as a suretyship by an authorised Insurer. The provision of the suretyship is not an indemnity policy but rather an accessory agreement by which the surety binds itself to the Master for the Trustee’s performance whilst in office. As with all suretyships, should the principal debtor (Trustee) default and the surety have to make good any loss arising from such default, the surety has a right of recourse against the Trustee for that amount which it has paid to the Master.
Due to the complex administration of a trust involving the strict running of books of account as well as the keeping up with ever changing tax and other relevant legislation and case law, such appointments should be taken by professionals, with the necessary expertise in administering trusts. Where non-professional Trustees are appointed and are required to provide a surety bond to the Master, Shackleton Risk requires that he/she be assisted by a professional in his/ her duties to minimise any risk of negligent act, error or omission arising and causing a loss to beneficiaries.Trustee bonds are provided through our lead Insurer Safire Insurance Company Limited and may be lodged by us with the Master of the High Court on your behalf should you require us to do so.
Surety bond premiums for Trustee bonds are set by the Master of the High Court. The premium is an annual premium of 0.6% plus VAT on the asset value of the estate, renewable annually for the duration of the Trust.