A certain amount of administrative responsibility is created and certain requirements must be adhered to when operating a trust. These administrative burdens include:
- The compilation and retention of trust records from inception of the trust to at least five years after the trust has been deregistered.
- Trustees’ minutes and resolutions about all transactions must be drafted and retained.
- The maintenance of a separate bank account for all monies flowing in and out of the trust. This is a requirement of the Trust Property Control Act (section 10).
- The maintenance of an asset register.
- Adherence to any other specific administrative requirements stipulated in the trust deed. Ensure that you understand the trust deed, together with the duties that are expected of you.
It is important to demonstrate that the trust is managed as a separate entity to the founder and its beneficiaries. If there are no resolutions, minutes, or a separate bank account, the South African Revenue Service (Sars) and creditors, including, for example, a soon-to-be-ex-spouse, may request that the court declares the trust your alter ego, resulting in the disregard of the trust. This “cost” may be significantly higher than the effort required to administer the trust.