The law requires all trustees to act independently and impartially. In most family trust setups the founder, trustees, and beneficiaries are all related to one another and act in more than one capacity (being a beneficiary and trustee). In a setup like this, it can be very difficult for the trustees to act independently and impartially. This can defeat the purpose of the establishment of the trust and can leave the trust open to an attack as a sham or an invalid trust.
In order to reduce the risk of trust assets being regarded as your personal assets, and leaving them exposed to 3rd parties, it is crucial to appoint an independent trustee. Most Masters of the High Court now also require the appointment of an independent trustee in addition to the trustees who are beneficiaries of the trust. An independent trustee will be a person who is not related to the founder, trustees or beneficiaries, and who derives no benefit from the trust assets.
The independent trustee plays a crucial role in ensuring better management and administration of the trust.
The most important benefits of appointing an independent trustee are that it ensures the following:
- objectivity to how the trustees deal with trust assets;
- compliance with the provisions of the trust deed and statutory requirements;
- all trust beneficiaries are treated fairly;
- conducting proper trustee meetings;
- recording minutes of all meetings and major decisions by the trustees
For any advice on trusts, please contact us – or 0125431806