Page 27 - Q&A Book.indd

To determine a trustee’s right to benefit from a trust in which he holds
the position of trustee, one must carefully look at the fiduciary duties of
a trustee. In the first instance, section 9(1) of the Trust Property Control
Act 57 of 1988 states that trustees must, in the performance of their
duties and in exercising their powers, act with the care, diligence and
skill which can reasonably be expected of a person who manages the
affairs of another. Secondly, trustees must act in good faith, implying
that trustees must always act in the best interests of the beneficiaries.
Accordingly, buying property from a trust could result in a trustee
being accused of acting with self-interest and deriving a benefit that
is detrimental to the beneficiaries of the trust or of mismanagement of Commercial
the trust.
To safeguard yourself against such accusations, a trustee may
undertake the following steps in mitigation:
• If you have an interest in the transaction which may affect the
trust property, the nature and extent of the interest must be
disclosed beforehand to other trustees and trust beneficiaries.
• Carefully review the trust deed to determine whether the sale
of property is allowed and in line with the objectives of the trust
and whether the powers and duties of the trustees allow such
a sale.
• Obtain legal advice from an independent advisor or obtain
leave from the Master of the High Court to purchase the
property and confirmation that such purchase will not be
detrimental to the trust beneficiaries.
Should you feel that it is appropriate for you to consider the purchase
of the beach property from the trust, our advice would be to carefully
follow the steps above, and only after the appropriateness of the
purchase is confirmed, should any offer be made.

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