Trustee Bond
Why the need for a trustee bond?
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 an 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:
- Trusts created in a Will which come into effect upon death - Testamentary Trusts
- Inter-vivos trusts which are created during a person's lifetime to distribute assets to beneficiaries, eg's Family Trusts, and Trusts.
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 via leading local insurance companies and may be lodged by us with the Master of the High Court on your behalf should you require us to do so.
What you will require to obtain a Trustee bond through us:
Non-professional Trustee
- An approved joint application for facility
- Master's Form J344 (Undertaking)
- Your ID
- Copy of the Trust Deed or Court order (as the case may be)
- Master's Form J417 (Acceptance of Trusteeship)
- Details of the professional who will be assisting you with the administration of the trust
- An Undertaking from the professional to notify us if his/ her mandate has been terminated by you
- A suretyship guaranteeing your performance jointly with the surety to the Master of the High Court.
Professional Trustee
- An approved application for facility
- Form J344 Undertaking
- Your ID
- Copy of the Trust Deed or Court order (as the case may be)
- Form J417 Acceptance of Trusteeship
- Proof of active professional indemnity insurance
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.
For more information on Trustee bonds or to set up a consultation, please contact your local broker:
