April 21, 2020
HOW DOES ONE DE-REGISTER OR TERMINATE A TRUST?
The Trust Property Control Act makes no provision or specific measures to be complied with for the deregistration of a trust. Deregistration is an internal administrative action to facilitate the management of trust files in the Master’s office. The common law however makes provision for the termination of a trust by operation of law in the following circumstances, by statute, fulfilment of the object of the trust, failure of the beneficiary, renunciation or repudiation by the beneficiary, destruction of the trust property or the operation of a resolutive condition.
Before a trust is terminated any liabilities it may have will have to be settled before the remaining assets are distributed to beneficiaries. If a trust can be terminated on one of the above grounds then the Master will deregister a trust. For the termination of a trust the following documents are required:
- the original letter of authority;
- the trust’s bank statements reflecting a nil balance on the final statement;
- a resolution by all the trustees in terms of which they agree that the trust is to be terminated;
- proof that the beneficiaries have received their benefits – this is done in the form of an acquittance from each of the beneficiaries who have received a benefit;
- proof that the trust has been divested of all its assets – this is done by means of an affidavit signed by each of the trustees confirming that the trust has been divested of all its assets.
Where beneficiaries have accepted any benefit prior to the termination of the trust, it appears that they would have to be a party to the resolution to terminate the trust, although the trust deed may stipulate otherwise. Upon receipt of the above documents the Master will deregister a trust which has been terminated. It is to be noted that the above documents must be lodged with the Master’s office with whom the trust has been registered. The rule against the perpetuity of trusts in Anglo-American law does not apply in South African law. Trusts in South Africa can therefore operate indefinitely especially if there is no provision in the trust deed regarding termination. An example of such a trust is where there is a specific class of beneficiaries that have been named such as an educational trust which benefits say “……. the Grade 12 learners of ABC School who wish to attend university”.
Generally trust deeds have a termination clause which provides that the trust terminates on the happening of a certain event alternatively there is a catch-all clause providing for termination of the trust when the founder (if still alive) and the trustees unanimously agree to terminate the trust. Where a trust is terminated and there are no beneficiaries for the trustees to divest the remaining assets to and the founder is no longer alive such assets would become bona vacantia (Latin for “ownerless goods”) and accrue to the State.