A well-structured trust can preserve family wealth, protect vulnerable beneficiaries, and deliver tax and governance benefits that last for generations. At the heart of every successful trust is a competent board of trustees. Increasingly in South Africa, that board includes more than one trustee—often a mix of family members and at least one independent professional—working together as co-trustees. This article explains what a trust is, what trustees (and co-trustees) do, why multiple trustees are frequently required, how to make co-trusteeship work in practice, and the risks and advantages you should understand before you accept appointment.
What is a trust—and who are the players?
A trust is a legal arrangement in which a founder (also called the settlor or donor) transfers assets to trustees to hold and manage for the benefit of one or more beneficiaries. The trust deed—its founding instrument—sets out the rules: who the beneficiaries are, what powers trustees have, how decisions are made, and how assets may be invested or distributed.
- Founder/Settlor: creates the trust by donating or selling property into it and defining its purpose in the deed.
- Trustee: holds and administers the trust assets, not for personal gain but in a fiduciary capacity for beneficiaries.
- Co-trustee: one of two or more trustees serving at the same time. Co-trustees share duties and decision-making, and are jointly responsible for compliance, investment, distributions, and records.
In modern South African practice, especially for discretionary family trusts, the Master of the High Court often expects (and many banks insist on) the appointment of an independent trustee—a person with no family interest—alongside family co-trustees. This helps ensure genuine separation between control and enjoyment, improves governance, and reduces the risk of the trust being treated as the founder’s alter-ego.
What do a trustee and a co-trustee actually do?
Trustees have fiduciary duties: act with the utmost good faith, avoid conflicts, apply independent judgment, treat beneficiaries impartially, keep accurate records, and safeguard trust property. They must comply with the trust deed, the Trust Property Control Act, tax laws, FICA and beneficial-ownership disclosure rules, and any other applicable regulation.
A co-trustee has the same duties and the same potential liability as a sole trustee. The difference is practical: decisions must be made together, documents signed together (unless valid delegations exist), and oversight is shared. Co-trusteeship is not a dilution of responsibility; it is a multiplication of scrutiny and, if managed well, a multiplication of competence.
Special conditions and considerations when co-trustees are involved
Decision-making mechanics. Start with the deed. Some deeds require unanimous decisions; others allow a majority. Many also regulate quorum for meetings and the use of round-robin written resolutions. If your deed is silent or unclear, you may need a trustee resolution to standardise procedures. In every case, document deliberations and outcomes. Minutes are not optional—they are your first line of defence if a decision is challenged.
Authority to act. Third parties (banks, brokers, conveyancers) will ask who can sign. If the deed or a subsequent trustee resolution authorises any two trustees to sign, say so in writing and file specimen signatures with counterparties. If only one signature is permitted in specific scenarios (for example, to approve routine payments under a monetary threshold), define limits precisely and minute the delegation.
Independent trustee participation. An independent co-trustee must be more than a ceremonial signature. They should attend meetings, review financials, challenge assumptions, and help enforce proper boundaries between the personal finances of family members and the trust. Expect banks to insist that the independent co-trustee co-signs high-risk transactions.
Conflict management. Family trustees inevitably wear multiple hats—as parents, business partners, or even beneficiaries. When a co-trustee has a personal interest in an agenda item, declare it, minute it, and recuse that trustee from the decision if appropriate. The remaining co-trustees (including the independent) should ensure any resolution is objectively in the trust’s best interests.
Deadlocks and tie-breaks. Two trustees can deadlock. Three can too, if one abstains. Well-drafted deeds include a chair with a casting vote or a mediation/arbitration clause for disputes. If your deed lacks a mechanism, consider a trustee resolution adopting one, or amend the deed with the founder’s consent (if still alive) where permitted.
Continuity and replacements. Plan for resignation, incapacity, or death of a trustee. The deed should allow the remaining trustees to appoint replacements promptly and continue operating with a reduced quorum in the interim. Always notify the Master, update beneficial-ownership registers, and refresh banking mandates when changes occur.
Records and registers. Co-trustees are jointly responsible for accurate accounting records, annual financial statements, tax returns, resolutions, minutes, investment mandates, and the beneficial-ownership register lodged with the Master. Keep a secure, shared repository and a running action list so nothing falls through the cracks.
Risk, insurance, and indemnities. Trustees can be held personally liable for breach of trust. Many deeds allow the trust to indemnify trustees for good-faith acts, but not for gross negligence, wilful default, or fraud. Consider trustee liability insurance where appropriate, and ensure your deed’s indemnity clause is up to date.
The benefits of having co-trustees
Checks and balances. The biggest advantage of co-trusteeship is governance. Multiple eyes reduce error and abuse. An independent trustee helps ensure decisions are genuinely for beneficiaries, not for the founder or dominant family member.
Wider skill-set. A balanced board blends family insight with professional expertise—legal, tax, investment, and business. That breadth improves decision quality on distributions, asset allocation, and risk management.
Continuity and resilience. With multiple trustees, the trust can keep operating when one trustee is away, resigns, or passes away. Clear succession planning avoids administrative paralysis.
Credibility with counterparties. Banks, auditors, SARS, and the Master are more comfortable when they see genuine oversight. That credibility translates into smoother account opening, faster compliance reviews, and fewer queries.
Protection from “alter-ego” risk. Properly run co-trusteeship, with real independence and documented processes, strengthens the legal separation between the trust and the founder. That can be decisive in disputes, divorce proceedings, or creditor claims.
Making co-trusteeship work in practice
Think of your trustee board like a small, mission-driven company. Hold scheduled meetings (at least quarterly) with agendas, packs, and minutes. Review financial statements, bank reconciliations, investment performance, pending distributions, and risks. Maintain a calendar for tax filings, Master submissions, FICA/KYC updates, and policy renewals. Adopt an investment policy suited to the trust’s purpose and beneficiaries’ timelines. Require at least two signatories for payments above a modest threshold, and segregate duties where possible.
On distributions, use a standard memo that records each beneficiary’s circumstances, previous support, and the reasons for any award. This shows you exercised impartial discretion and considered the full picture—critical in discretionary trusts. For major actions (property sales, related-party transactions, loans), obtain independent valuations and minute the rationale.
Communication matters. Beneficiaries should understand the trust’s purpose, how to make requests, and when to expect feedback. Regular, plain-language updates reduce suspicion and conflict and help prevent complaints to regulators or court applications.
Finally, don’t under-invest in administration. Budget for bookkeeping, independent reviews, tax compliance, audits where appropriate, and professional advice on complex decisions. Good governance costs less than litigation.
When co-trusteeship goes wrong
Problems typically arise from silence (no minutes, no policies, no clarity), dominance (one person calls the shots), or drift (a “set and forget” mindset). The consequences can be severe: frozen bank accounts until governance is fixed, removal of trustees by the Master or a court, tax penalties, or even the trust being ignored (“pierced”) in disputes. Avoid this by embedding the basics—clear decision rules, active independent oversight, complete records, and a culture of fiduciary care.
How Crest Trust can help
Crest Trust serves as an independent co-trustee or as your board’s professional backbone—drafting meeting frameworks, maintaining registers and minutes, coordinating compliance, and bringing practical, South-African fiduciary experience to complex decisions. If you are forming a trust or rehabilitating the governance of an existing one, we can help you design a co-trusteeship model that is robust, efficient, and easy to live with.
FAQs
What does it mean to be a co-trustee?
It means you serve alongside one or more other trustees, sharing fiduciary duties and authority. You must participate in decisions, sign documents within agreed mandates, keep beneficiaries’ interests first, and ensure the trust complies with its deed and the law. Responsibility is joint: you cannot hide behind “the other trustee”.
What is the difference between a co-trustee and a settlor?
A settlor (founder/donor) creates the trust and transfers assets to it. A co-trustee administers those assets for beneficiaries under the deed. The settlor may or may not also be a trustee; the roles are distinct—creation versus ongoing fiduciary management.
Is settlor the same as trustee?
No. The settlor establishes the trust; a trustee manages it. One person can hold both roles if the deed allows, but their capacities are different and must be treated as such in decisions and records.
Can a trustee also be the settlor?
Yes, provided the deed permits it and there is sufficient independence and governance to avoid alter-ego risk. In South Africa, including an independent co-trustee and running proper processes (minutes, dual signatures, clear conflicts policies) is essential when the founder also serves as trustee.