Beyond The Trust Deed: What South Africa’s Proposed Trust Reforms Mean For Family Wealth

One of the easiest mistakes to make in private client practice is to confuse having a trust with having a trust strategy.

A trust deed may be perfectly drafted, yet the trust may be poorly governed. Trustees may have been appointed years ago and no longer be appropriate. Investment decisions may be sensible but undocumented. Distributions may have become habitual rather than considered. The founder may have died, beneficiaries may now live in different countries, and the structure may bear surprisingly little resemblance to the family for which it was originally created.

Having advised families whose assets, family members, trustees and succession arrangements extend across a number of jurisdictions, we find that the weakest point is often not the absence of sophisticated structures. It is the gap between structure and operation.

The proposed Regulation of Trusts Bill, 2026 (the “Bill”) brings that gap into sharp focus.

The Bill, which remains draft legislation at the date of writing, proposes replacing the Trust Property Control Act 57 of 1988 (the “existing Act”) with a substantially more developed regulatory framework. Much attention has understandably been directed at beneficial ownership, annual returns and enhanced enforcement. Those provisions matter. But viewed through a private-client lens, the Bill signals something broader.

It moves trust administration towards a world in which good governance must increasingly be demonstrable, not merely assumed.

The trust file becomes part of the estate plan

One of the quieter but more significant provisions is the proposed record-keeping regime.

Trustees would be required to retain not simply the trust instrument and financial information, but records of trustee resolutions, contracts, appointments and removals, accounting records and documents evidencing the investment, control, administration, alienation and distribution of trust property. While the existing Act already imposes a general duty to keep accounting records, the Bill significantly expands both the scope and specificity of that obligation. The Bill also proposes annual financial statements as the default position and introduces an annual return to the Master.

For established family trusts, this changes the conversation.

The quality of a trust will increasingly be judged not only by what its deed permits, but by whether its records show that trustees actually exercised the discretion entrusted to them.

A distribution resolution should reveal a decision, not merely document an outcome already decided elsewhere. A substantial loan should be capable of explanation. Where trustees retain an unusually concentrated asset position, the file should ideally demonstrate why. Changes in beneficiaries, trustee composition and control should form part of a coherent administrative history.

The trust file therefore becomes more than a compliance archive. It becomes evidence of governance.

For private clients, that is important because the people who eventually need to understand that file may not be the people who created the structure. They may be children, successor trustees, executors, foreign advisers, a regulator or, in a dispute, a court.

Investment governance deserves considerably more attention

The proposed investment provision is particularly significant.

When trustees exercise investment powers, the Bill introduces an express statutory prudent-investor framework. It identifies a range of considerations including the objectives of the trust, the circumstances of beneficiaries, diversification, risk, preservation of real value, potential capital appreciation, income, liquidity, inflation, taxation, investment costs and the trustees’ overall investment strategy. While the existing Act already imposes a statutory duty on trustees to exercise the care, diligence and skill reasonably expected of a person managing the affairs of another, the Bill codifies these investment considerations into a structured statutory standard, a significant development.

For many substantial family trusts, this is not theoretical.

A trust may hold shares in the family operating company, a large property portfolio, offshore securities, cash awaiting deployment and investments denominated in several currencies. The beneficiaries may themselves have different needs: one generation may require income while the next is concerned with long-term capital preservation.

The question is therefore not simply whether an investment ultimately performed well.

The more important governance question is whether the trustees exercised an informed judgment appropriate to the trust.

In practice, this is likely to place greater importance on carefully considered investment mandates, periodic reviews and trustee resolutions recording why a particular investment strategy remains appropriate. It does not mean that every family trust requires an elaborate institutional investment committee. Rather, trustees should increasingly be able to explain the architecture behind the portfolio they oversee.

That distinction matters.

Trustee succession is succession planning

Families often spend substantial time deciding who receives wealth and considerably less time deciding who will control the structures holding that wealth when the current generation is no longer there.

The Bill also gives the Master power, in certain circumstances, to appoint co-trustees and, in specified cases, an independent trustee. The precise scope of those powers and the circumstances in which the Master may override the provisions of a trust deed will require careful analysis once the Bill is finalised, as this represents a significant intervention in the autonomy of private trusts.

This should prompt a review of older family trust deeds., including asking the following questions:

• Who appoints the next trustee if the founder has passed on?
• Does the mechanism remain workable if the children live in different jurisdictions?
• Does the deed assume the continued involvement of an adviser who retired ten years ago?
• Is there an appropriate balance between family representation and independence?
• Importantly, is the next generation ready to exercise fiduciary powers rather than merely enjoy economic benefits?

These are succession questions just as surely as the provisions of a Will are succession questions.

A sophisticated estate plan that provides carefully for the transmission of assets but leaves trustee succession to chance remains incomplete.

These questions are particularly relevant to testamentary trusts, where trustee appointments and succession arrangements are embedded in the Will itself. The proposed governance framework therefore reinforces the importance of ensuring that testamentary trustee provisions remain workable and sufficiently flexible to accommodate future vacancies and succession.

Cross-border families need to look at the map, not only the deed

Cross-border families create another layer of complexity.

The Bill continues the existing position in relation to persons appointed as trustees outside South Africa who administer or dispose of trust property in South Africa. Such trustees remain subject to South African trust legislation in relation to that property and require written authorisation from the Master. The practical operation of this regime, including its interaction with foreign trusts and the Master’s administrative requirements, will nevertheless warrant careful attention once the Bill is finalised.

That provision should not be overstated. It does not purport simply to make South African law applicable to every foreign trust merely because a South African family member is involved.

But it illustrates an important planning reality.

Trustee residence, asset location and the jurisdictions in which family members live can no longer sensibly be considered in separate boxes.

The beneficial-ownership provisions reinforce that point. The proposed definition extends beyond beneficiaries expressly named in a deed to beneficiaries who are identifiable despite not being named. Where certain founders, trustees or beneficiaries are juristic persons or similar vehicles, the provisions contemplate looking through those structures to relevant natural persons.

It is worth noting that this builds on the beneficial-ownership obligations already imposed directly on trustees under the existing Act, alongside the related customer due diligence requirements under FICA. Under the Bill, however, beneficial-ownership disclosure becomes even more deeply embedded in the administration of the trust, rather than operating merely as a reporting obligation.

For an internationally mobile family, the family tree, asset map and legal structure therefore increasingly need to be read together.

Moving a family member abroad is not necessarily just an immigration event. Appointing a foreign trustee is not merely an administrative choice. Placing an offshore entity into a structure is not simply an investment decision. Each can have consequences for governance, reporting, taxation and the practical administration of the wider estate plan.

This is why cross-border planning should begin with the family and its objectives, rather than with a diagram of entities.

Amending the deed may itself become a governance event

The proposed treatment of trust deed amendments also deserves attention.

Under the Bill, trustees would not be able to lodge an amendment unless prescribed beneficial-ownership information had been lodged and was current. More significantly, trustees could not exercise powers derived from an amendment until it had been lodged and the Master had acknowledged that lodgement. The Bill proposes that actions taken prematurely would be invalid, with potential personal liability for resulting loss. If enacted in this form, this would have significant implications for transactional practice.

That matters enormously in practice.

Trust amendments are frequently part of broader transactions: trustee changes, family-business reorganisations, succession exercises or changes required before another commercial step can occur.

The administration of the trust can therefore no longer be regarded as the paperwork that follows the planning. It may become part of the critical path of the transaction itself.

For cross-border families in particular, where banks, fiduciaries and advisers in several jurisdictions may be working towards a common implementation date, that deserves to be factored into planning from the outset.

Being a trustee becomes a more serious proposition

The Bill also sharpens the distinction between being a family member and being a fiduciary.

The proposed standard of care expressly takes account of the special knowledge or experience that a trustee possesses or holds themselves out as possessing, and of the knowledge and experience reasonably expected of somebody acting as trustee in the course of a particular business or profession. This largely codifies the principle already recognised by South African law but elevates it to a statutory standard with explicit consequences.

Professional trustees should therefore read the Bill particularly carefully.

At the same time, family members should resist treating trusteeship as an honorary appointment bestowed because somebody is trustworthy, successful or related to the founder.

Trusteeship is work.

The proposed framework reinforces that point through annual obligations, record-keeping requirements, compliance notices and administrative fines. Importantly, an administrative fine imposed under the proposed regime would be payable personally by the trustee and could not be recovered from trust property. Certain contraventions may also attract criminal consequences.

The practical implication is not that capable people should avoid trusteeship.

It is that they should understand what they are agreeing to.

Much of the practical detail is still to come

There is an important qualification.

The Bill leaves a substantial amount of detail to regulation. Among the matters still to be prescribed are fees, the financial thresholds relevant to certain exemptions from preparing annual financial statements, the form and content of annual returns, aspects of beneficial-ownership records and registers, procedures relating to administrative fines and the maximum amounts of those fines.

Accordingly, it is too early to quantify the full administrative or financial burden of the proposed regime.

Private clients should be cautious about undertaking substantial restructuring solely in anticipation of draft legislation whose final wording and accompanying regulations may change.

However, waiting for enactment need not mean doing nothing.

The better question

The Bill may change before enactment. The underlying governance question will not.

For families, the real test is not simply whether a trust is compliant, but whether it remains fit for purpose: properly governed, succession-ready and aligned with the family it was created to serve.

So, the better question is not:

“Do we have the right trust?”

but rather

“Will the trust still work when the people who created it are no longer there to explain it?”

A durable trust should not depend on oral history.

The real measure of a trust lies not in the sophistication of its structure but in its ability to endure beyond those who created it.