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Trusts and Estate Planning

We always recommended an independent professional trustee. Now it is a “must have”

The reason for the recommendation dates back about 12 years to the Badenhorst vs. Badenhorst case. The Badenhorsts were getting divorced and Mrs wanted 1/2 of Mr’s assets. He didn’t have any – they were all owned by a living trust that he had set up previously. Mrs Badenhorst took him to court and won the case. The judge said that Mr Badenhorst’s trust only had his brother as the other trustee, they never discussed the trust (i.e. there were no minuted meetings), Mr B bought and sold trust assets as if they were his own, so the trust was a sham, his alter ego (other self). He awarded half of the trust assets to Mrs. B. However, in his summing up the judge said, “If I had seen an independent professional as one of the trustees, I may have come to a different conclusion”, or words to that effect. Ever since, it has been the custom to ensure that every trust had an independent professional trustee.

About two years ago, the Master of the High Court in Johannesburg, decided that she was going to enforce case law (which she has no power to do) and insisted that all so called “Family business trusts” must have an independent professional trustee, so now you have no choice, which is not a bad thing, because you are forced to do what is best for the trust anyway.

Unfortunately, these professionals charge monthly or annual fees, ranging from our R4 150 (2019) per annum or R450 per month to as much as R12 000 per year. IProtect are in the middle at R650 per month. However, if the trust is properly structured, this is the only maintenance cost. There should be no tax reutrns and no bank charges.

What do your trustee’s fees buy? Nothing! Just that you have to have one. In the case of Harbour and Associates, however, your professional is available for unlimited free meetings to discuss tax, business or trust matters. Now there’s a win!



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Looking for even more informative content? Check out the books I have written which have proved to be very popular.

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