The concept establishment of a trust inter vivos, which can be described in simple terms as a "living trust" for investment purposes has gained momentum in the broader business community, especially in empowerment transactions. The apparent reason for choosing a trust as a vehicle to hold investments on behalf beneficiaries (ie. mining communities) is the idea that beneficiaries are not involved in the administration of the trust. Most trustees hold the office of trust without really understanding the duties that come with the privilege.

There are a number of sections in the Trust Property Control Act 57 of 1988 which indicate that the trustees must ensure that proper accounting records are kept, detailed minutes of trustees' meetings are taken and that annual financial statements are prepared. These include the following:

Section 11: The registration and identification of trust property
This section requires the trustees to indicate clearly in their bookkeeping the property that they hold in their capacity as trustees. This is to ensure that the property is not regarded as the personal property of any of the trustees. The record must indicate the nature of the trust assets, the location of the assets and the monetary value ascribed to each asset.

Section 16: The Master may call upon trustees to account
A trustee is required, when called to do so, to account to the Master of the High Court for the administration and disposal of trust property. This means the trustee must deliver "any book, record, account or document relating to the administration of trust assets or any question put to a trustee by the Master in connection with the administration and disposal of trust assets.
It is therefore vital, that minute books are kept, giving details of all meetings of trustees and decisions taken at such meetings and filing of all records of transactions as evidence of the reliability of trust records and financial statements.

Section 17 - Custody of Trust Document
A trustee may not, in terms of the Act, destroy, without consent of the Master, any document that serves as proof of the investment, safe custody, control, administration, alienation and distribution of trust property before the expiry of five years from period of termination of a trust. This section highlight the duties imposed on trustees to maintain and preserve the underlying documents and vouchers forming the basis of those records.

These duties imposed on the trustees' places an administrative burden on the trustees, most of who are also involved in other commercial activities. It is clear that the daily administration of trusts cannot be left to the trustees and professionals with expertise in the field of administration of trusts should be roped in to assist the trustees in carrying out their duties.

Written by: Pule Malahlela of Masephule Dinga