Trusts have been utilised for years to better protect the assets of beneficiaries. This legal arrangement is designed to hold and manage assets that are overseen by appointed trustees. These trustees must do more than protect and administer trust property; they are also required to use these assets wisely to further the objectives of the trust, generate profits and provide additional benefits.
When issues arise and a trustee no longer fulfils these requirements, one may wish to have the individual removed from the position. Generally speaking, the trust deed would detail the process for the removal of a truste.
Unfortunately, in more complicated situations or where disputes prevail, a trustee may reject settlement negotiations or refuse to resign from the position. In such cases, forcible removal is the only alternative action, when the removal of the individual is in the best interest of the trust and its beneficiaries.
The Trust Property Control Act 57 of 1988, Section 20, details that a trustee may be removed through court application by either the Master of the High Court or by any individual who has a vested interest in the trust property if the following circumstances prevail:
- The trustee fails to meet the duties imposed under this Act or fails to comply with lawful requests by the Master.
- If the trustee has been convicted of an offence where dishonesty is a factor or the individual has been sentenced to imprisonment with bail.
- The trustee fails to provide satisfactory security within two months of the request or longer, if allowed by the Master.
- The estate has undergone sequestration or liquidation under the care of the trustee.
- The trustee has been declared mentally ill or incapable of managing their affairs, is detained or admitted into an institution.
- The best interest of the trust and its beneficiaries has not been met.
A trust deed can stipulate harsher conditions detailing removal, when the deed is created. These deeds should ideally include resolution tactics for disaffected parties to rely on in the event of a dispute.
For all of these reasons, seeking legal advice at the conception of a trust is essential for successful management of the trust and to better avoid resource-draining action should a trustee removal be required.
At MMS Trust Services (Pty) Ltd we are committed to keeping up to date with the latest changes to the legislative landscape affecting Trusts, and in providing pro-active and personalised trust services for each client as part of their long term financial and tax planning requirements. This article strives to provide additional information regarding trustee removal but should not be used or relied on as professional advice. The professionals at MMS Group specialise in trust services related to accurate accounting processes, however, do not specialise in legal matters. Should you require accounting services for your trust, reach out to our team.
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