Article 2: Starting a Trust the Smart Way

This article forms part of our three-part series on Trusts in South Africa, exploring what they are, how they are created, and how they work in practice. The aim is to make an often complex topic clear, relevant and accessible to everyone.

Creating a trust is not simply filling out a few forms or signing a document. It is the beginning of a legal relationship built on confidence, responsibility, and trust — in every sense of the word. Many people decide to form a trust to safeguard family assets, manage property, or plan for the next generation, but few realise that the law requires care and precision from the very start.

The Trust Property Control Act 57 of 1988 governs the way trusts are created and managed in South Africa. The process begins when a founder decides to place assets — whether cash, property, or investments — under the control of trustees, who will manage them for the benefit of others, known as beneficiaries. This intention is recorded in a written document called a trust deed, which must set out exactly how the trust will function. The trust deed is, in many ways, the trust’s constitution. If it is vague or poorly drafted, the entire structure may be questioned later on.

To bring a trust into legal existence, it must be registered with the Master of the High Court. The Master will only issue a Letter of Authority once satisfied that all requirements have been met. No trustee may act on behalf of the trust until this letter has been granted. Acting before receiving the letter is one of the most common and costly mistakes people make.

In practical terms, the following steps are required to register a trust:

1. A trust deed must be drafted and signed by the founder and trustees.

2. Supporting documents — including certified identity copies, acceptance of trusteeship forms, and the Master’s prescribed forms — must be submitted to the Master’s Office.

3. Once approved, the Master issues the Letter of Authority.

4. The trust can then open a bank account in its own name and begin operating.

A valid trust must also have at least one trustee, though two or more are recommended to ensure independence. There must be a clear separation between the founder and the trustees, and between the trustees and the beneficiaries. This separation is vital. If the same person controls and benefits from the trust, it may later be seen as a “sham trust” - one that exists only on paper.

Equally important is the intention behind forming the trust. It should serve a genuine purpose, not merely as a shield against creditors or taxes. As the courts have often warned, a trust used for dishonest or artificial reasons can be set aside.

When properly formed, however, a trust can provide stability and continuity that few other structures can match. It can ensure that assets are preserved, children are protected, and wishes are respected long after the founder is gone.

In our next and final article, we will look at how a trust functions in practice — how trustees should act, what records must be kept, and the five key elements that determine whether a trust will stand the test of time.

Written by: Marert Carroll and Irma Gaybba
Moderated and approved by: Stacey Barnard