Trusts can be powerful tools in financial planning allowing you to protect your assets and distribute your wealth according to your wishes. Despite their many benefits, few people know what is required to register a trust in South Africa. That is why we decided to write this blog to look at the required documents and steps involved when registering a trust. To help make the process clearer and easier for those wanting to form and register a trust.

What is a trust?

Before we take a look at how to register a trust we must understand what a trust is. A trust is a legal arrangement in which a Founder gives the right to hold title to and manage property or assets to another party, the trustee, for the benefit of a third party, the beneficiary. There are two types of trusts in South Africa, an inter-vivos trust, which is created between living individuals, and a testamentary trust which is derived from the valid will of a deceased individual. Both forms of trust are legal entities with separate and distinct rights, much like an individual or corporation, and are governed by the provisions of the Trust Property Control Act 57 of 1988.

Purpose of trusts

Trusts are powerful fiduciary tools for protecting assets and ensuring they go where the owner intended. Some of the common purposes of trusts are as follows:

Secure assets: Trusts are often used to secure assets for a specific purpose, such as the beneficiary’s education, or money for them to start their own business.
Beneficiary care: Trusts are also commonly used to ensure that care is provided for dependents with a physical disability or mental health issues.
Estate planning: Trusts are a necessary tool in estate planning as children under the age of 18 require a trustee to manage assets that were left to them in a will until they reach the age of 18.
Tax planning: Trusts can also be useful in securing more favourable tax deductions as the assets in a trust are not as heavily taxed.

Steps to register a trust

Now that we have a better understanding of what a trust is in South Africa we can take a look at how you can register a trust, and what you will need to do so. All trusts in South Africa must be registered with the Master’s office which will then issue the trustees with letters of authority to administer the trust.

An inter-vivos trust must be registered with the Master in whose jurisdictional area the majority of the trust’s assets are located. To register a trust with the Master’s office you will need to follow these steps:

Step 1: Design your trust

The first step to register a trust is to design the trust. This involves deciding on the purpose of your trust, who the trustee will be, and who the beneficiaries are, all of which is done by drafting a trust deed. A trust deed is a written document indicating what assets will be transferred to the trust, who the trustee/s will be, who the beneficiaries of the trust are, and how the trust must be administered. This is a fundamental and important step when registering a trust as it is the foundation of the trust which outlines all of the relevant details pertaining to the assets involved. That is why it is often necessary to consult fiduciary professionals like those at Crest Trust to assist in drafting the trust deed. With professional assistance, you can ensure your trust deed is comprehensive, in line with your wishes, and adheres to all relevant legislation. For a testamentary trust the will of the deceased acts as the trust deed.

Step 2: Gather the required documents

To register a trust with the Master’s office you will need the following documents:

For an inter-vivos trust

Trust Deed: The Master’s office requires the original trust deed or a notarial certified copy thereof. This provides the Master’s office with all relevant information regarding the purpose and key parties of a trust.
Proof of payment: The registration of a trust requires payments to the Master’s office, the latest fee structure can be found here, and proof of payment must be provided with all documentation.
Application form: The completed application form (J401) which includes details of the trust like its name, expected duration and more.
Completed acceptance of trusteeship: The completed acceptance of trusteeship form (J417) which provides details of the trustees and their willingness to administer the trust.
Completed acceptance of Auditor application: The completed acceptance of auditor application form (J405) provides details of the auditor of the trust and their willingness to serve in this role.
Beneficiary declaration: A completed beneficiary declaration form (J450) which is a comprehensive list of the beneficiaries of the trust and their details.
Verified identification: Certified copies of the ID/Passport/birth certificate of the trustees, trustee’s representative, and beneficiaries.
Bond of security by the trustees: A legally binding document (J344) that affirms the trustees’ responsibility to properly administer the trust and outlines the accountability of the trustees.
FIC requirements: All named parties of an inter vivos trust are deemed to be beneficial owners of the trust and must lodge the required information with the Master of the High Court.

For a testamentary trust

Application form: The completed application form (J401) which includes details of the trust like its name, expected duration and more.
Completed acceptance of trusteeship: The completed acceptance of trusteeship form (J417) which provides details of the trustees and their willingness to administer the trust.
Completed acceptance of Auditor application: The completed acceptance of auditor application form (J405) provides details of the auditor of the trust and their willingness to serve in this role.
Beneficiary declaration: A completed beneficiary declaration form (J450) which is a comprehensive list of the beneficiaries of the trust and their details.

Step 3: Submit application

Once you have gathered the above documentation the next step to register a trust is to submit them to the Master of the High Court. This can be done by post or by going to your local Master’s office directly. The details of your local Master’s office can be found here.

Step 4: Letters of authority

Once your registration details have been submitted to the Master’s office, and if everything is in order, the trustees will be issued letters of authority. This gives them the authority to administer the trust, which includes important aspects like opening a bank account for the trust, keeping financial records, and more.

Conclusion

As we have seen a trust is a powerful financial instrument, which is why it must be registered with the Master’s office. This registration process can be quite daunting, however, we hope this blog has helped make the process understandable. If you are still unsure about the process to register a trust, be sure to contact the professionals at Crest Trust. With years of experience, they will be able to assist you at any point in creating the perfect trust for your needs.

FAQ

How much does it cost to set up a trust in South Africa?

The cost of setting up a trust in South Africa from drafting the trust deed to registration can cost anything between R7000 and R20 000, with the registration fee being R250.

Where do I register a trust in South Africa?

Trusts in South Africa are registered at the Master of the High Court offices. Their full list of offices can be found here.

What are the requirements for a trust in South Africa?

There are a number of requirements for a trust in South Africa, these include a registered beneficiary, registered assets, trustee/s, auditors and more. For a full list of requirements and to ensure your trust meets them, contact the professionals at Crest Trust.

Does a trust have to be registered with SARS?

Trusts must be registered with the South African Revenue Services (SARS) for the taxes it may be liable for.

Which documents must be lodged when registering a trust?

When registering a trust the following documents must be lodged:

Trust deed or a notarial certified copy thereof
Proof of payment of the registration fee
Completed application form (J401)
Completed acceptance of trusteeship form (J417)
Completed acceptance of auditor form (J405)
Completed beneficiary declaration form (J450)
Certified copies of ID/Passport/birth certificate of all individuals involved in the trust
Bond of security by the trustees (J344)

How much tax does a trust pay in South Africa?

The tax rate on the taxable income of a trust in South Africa, excluding special trusts, is 45%.

How long does a trust registration take?

The time it takes to register a trust depends on the Master’s office where it is being registered, as each office has their own processes in place, and there can be delays due to staff shortages or loadshedding. Registering a new trust in Pretoria and Johannesburg can be done within 14 days of lodgment of all relevant documentation.

How do I register a trust with SARS?

Registration of a trust with SARS can be done through their online portal, details of what is required can be found here.
What is the minimum number of trustees in a trust in South Africa?

While there is no legally prescribed minimum number of trustees, a trust deed or testamentary trust may specify a minimum number of trustees required.

What type of trust is best?

There are a variety of trusts available however the best is not easy to distinguish as it always depends on the requirements of the person establishing the trust, and what they want to achieve with the trust.

How to register a trust