[TOP STORY] Overhauling trust administration

Simon Brown (0:02)

MoneywebNOW, on the money.

This podcast is brought to you by Stainlip Acid Management. Invest in more certainty to navigate volatile market conditions. I'm chatting with Mbonisi Ndlovu, partner at Citadel Fiduciary. Mbonisi, I appreciate the time today. Proposed regulation of trust bills at 2026 Some significant changes perhaps for trusts. My sense around it perhaps is maybe for sort of professional trustees, less of an issue. A lot of this is around sort of how processes are managed.

Mbonisi Ndlovu (0:34)

That is correct, Simon. So for the past couple of years, since 1988, trusts have been regulated by what we call the Trust Property Control Act. And so now we are now moving to a different dispensation.

This Regulation of Trusts Bill proposes a different way of operating. So it doesn't necessarily, this whole proposed bill doesn't necessarily do away with the reason for existence of trusts. It's purely there to ensure that there's greater governance and transparency and accountability for trusts, just to regularize that whole process.

Simon Brown (1:11)

And that's an important point you made there. This is not doing away with trusts. It's not changing tax rules or anything. It's actually just making them, truthfully, a more efficient and more productive vehicle for many purposes, often cases estate planning.

Mbonisi Ndlovu (1:24)

That is very much correct. So essentially, for most people such as, you know, your beneficiaries of the trust, they will enjoy more transparency as to, you know, what the trust actually entails. And then for trustees themselves, they are now pretty much have a higher standard in comparison to the current dispensation which is regulated by the Trust Office Control Act. And so now there's a higher threshold, enhanced supervisory role that the master of the high court now plays with regards to, you know, how trusts are basically administered by trustees.

Simon Brown (2:00)

I want to come a bunch more to the master of the high court. But for those who are beneficiaries, again, this is the good news. This is better transparency. This is better oversight. This is better reporting in many senses. It's kind of bringing the 1988 law into modern times.

Mbonisi Ndlovu (2:16)

That is correct. So now when I speak about beneficiaries, transparency there, oftentimes, you know, the vulnerable beneficiaries, such as children, because oftentimes when we establish trust for vulnerable groups, such as children, people living with disabilities, those people cannot necessarily speak up for themselves. So someone has to kind of like protect their interests, which is what this bill is trying to do, to ensure that a whole lot of, you know, accountability, you know, for instance, your annual financial statements are basically investigated, etc., etc., when there's a need. So ultimately, that is there for purposes of protecting beneficiaries by enhancing the role of the master and increasing the obligations of trustees.

Simon Brown (3:03)

One place it might hurt, and I said up front, for professional trust operations, you've solved it at Citadel. You're probably already doing a lot of this, and I'm thinking around the record-keeping obligation. You know, there's what's required, but in many cases, you go further than that. For some trusts, this might present a problem, particularly if you've got, for want of a poor phrase, sort of the amateur who's kind of running it.

Mbonisi Ndlovu (3:26)

That is correct, Simon. So, I often see that, often people would set up family trusts and then they'll have a friend to be an additional trustee who hasn't got trust acumen. And that poses a huge problem in that they do not quite keep the records of the minutes for the meetings, resolutions. And remember, the reason for the existence of trusts is that everything must be documented, right? So your resolutions, your agreements, etc., etc. So now, with this new dispensation, which applies to also professional trustees, as well as lay trustees, laymen trustees. So everybody is now held to the same standard.

Records, for instance, should they want to resign as trustees, they would have to actually keep records of all the documents of the trust that they are privy to. For instance, your trustees, etc., etc. resolutions and minutes. So ultimately, the standard applies to all trustees, whether you've got trust acumen or not. So it's quite important that you bear that in mind.

And of course, for any other person who wants to actually take on trusteehip roles, that is another imposed obligation by this new bill, which is currently under discussion.

Simon Brown (4:40)

Master of the High Court, you mentioned this. They now play, as I understand, an expanding role in this. What is their role going to be? Because it's going to be, I mean, you mentioned that, if someone wants to resign, it needs to be acknowledged by the master. They can impose fines. There's a lot more going to the master of the High Court.