The Trust Property Control Act has been with us since 1988. On 7 August 2026, the Government Gazette published the Regulation of Trusts Bill, which proposes to repeal and replace the Act in its entirety. Minister of Justice and Constitutional Development, Mmamoloko Kubayi, indicated that the Bill is intended, among other things, to respond to recommendations of the Financial Action Task Force (FATF) and to modernise the regulation of trusts.
The objectives are understandable. South Africa has experienced the consequences of inadequate beneficial ownership transparency, including its greylisting by the FATF. Trusts, like companies and other legal structures, can be abused to conceal assets. Recent revelations concerning corruption, illicit financial flows and matters emerging from the so-called Madlanga Commission have only reinforced the need for effective oversight. The Honourable Julius Malema, sitting at the Kgosi Mampuru Correctional Centre, famously asked Vusimusi “Cat” Matlala before the Ad Hoc Committee investigating the allegations made by Lieutenant-General Nhlanhla Mkhwanazi why Matlala had not transferred his shareholding in Medicare24 to a trust. The exchange is a useful illustration of the role that trusts can play in public discussions about asset ownership and concealment.
It is nevertheless worth questioning whether the existing trust law is properly described as “outdated” simply because the principal legislation dates from the 1980s.
Many of the core concepts underlying South African trust law have survived precisely because they were expressed as broad principles capable of adapting to changing circumstances. Trust law has continued to develop through the common law and the courts. The problem is not that the concept of the trust has failed to keep pace with the times. Rather, it is that trusts have increasingly been used in ways that the State now, quite reasonably, seeks to prevent. The Bill is also part of a broader international movement towards the codification of law.
That distinction matters because the Bill does considerably more than address abuse.
It introduces a number of new statutory definitions, including “discretionary beneficiary” and “independent trustee” in the context of family trusts. There is value in greater certainty, but statutory definitions necessarily establish parameters. Once those parameters exist, advisers and taxpayers will inevitably consider how structures can be designed around them. The question is whether these definitions genuinely address abuse or simply create another layer of technical compliance and planning opportunities.
The Bill also sets out requirements for the creation of a trust. Yet its wording leaves some uncertainty as to whether a trust is created in terms of the legislation or whether the trust is created independently under common-law principles and merely regulated by the Act. Much of what is presented as statutory requirements already reflects principles developed in South African trust law, including those associated with the late Professor Tony Honoré. The codification of these principles may provide certainty, but it also risks replacing the flexibility of the common law with rigid statutory rules.
This tension is most apparent in the proposed regulation of amendments to trust deeds.
Traditionally, a trust deed could be amended in accordance with its own provisions, subject to the applicable law, with the Master being notified of the amendment. The Bill changes this significantly. An amendment will not be effective until the trust’s beneficial ownership information has been brought up to date and the amendment has been noted by the Master.
There is a compelling policy rationale. The ability to add and remove beneficiaries can be abused to obscure beneficial ownership, frustrate investigations or manipulate the apparent ownership of assets. Although not necessarily criminal, we have also seen ingenious tax schemes exploiting precisely this flexibility. In the context of FATF recommendations and the abuse of trusts by criminals and corrupt officials, it is entirely legitimate for the State to ensure that beneficial ownership information remains accurate.
There is, however, another interested party in all of this: SARS. Greater documentary requirements, beneficial ownership information and mandatory filing obligations inevitably provide SARS with a more comprehensive picture of trust structures and their activities. This development sits alongside the recent expansion of trusts’ obligations to register for income tax and submit annual income tax returns. Greater transparency may be justified, but it would be naïve to ignore the broader regulatory and revenue-collection consequences of these changes.
But this comes at a cost.
South Africa has an extensive and legitimate use of family trusts. Trusts hold holiday homes, farms, family businesses and investment assets. Trusts are also frequently used in the commercial environment to make investments and facilitate transactions. Their deeds are often amended because circumstances change. Trustees may need to amend investment powers, administrative provisions, trustee powers or other terms to facilitate a transaction.
Under the Bill, the effectiveness of these amendments may depend on an administrative process controlled by the Master. What happens when documents are lost? What happens when an application is not considered for months? What happens when the transaction for which an amendment is required has to be implemented tomorrow? More fundamentally, how much authority should the Master have over the private affairs of individuals who have established a trust for legitimate purposes?
These are not merely administrative inconveniences. They go to the usefulness of the trust as a flexible legal structure whereby trust property is dedicated to a separate estate protected from creditors of the trustees, the founder or beneficiaries in their personal capacities.
The Bill therefore marks an important shift in the relationship between private parties and the State. A trust is created through an arrangement between private parties, although the trustee occupies a fiduciary office and the trust is subject to public regulation. Historically, however, the State has largely regulated the office and conduct of trustees rather than supervising every aspect of the private arrangement itself.
The Bill provides for the State moving further into that private relationship. It increasingly makes the effectiveness of private decisions dependent on administrative intervention.
The same issue arises with trustee resignations. The Bill seeks to resolve an existing uncertainty by providing that a trustee’s resignation becomes effective when the trustee receives the Master’s written acknowledgement of the resignation documents. There is merit in certainty. But a trustee may have very good reasons to resign immediately, particularly where relationships between trustees have broken down or where the trustee is concerned about potential personal liability. It is difficult to see why the effectiveness of a private fiduciary resignation should necessarily depend upon the speed with which a government office processes the paperwork, particularly given the Master’s existing administrative challenges.
A similar concern arises in relation to the termination of trusts. Trust deeds generally provide for when a trust terminates and when that termination takes effect. Section 28 of the Bill instead provides that a trust terminates when its name is removed from the trust register. This potentially creates tension with the common law and the terms of the trust deed. An administrative act should ideally record the legal position, rather than determine when a substantive legal relationship comes to an end.
Not all of the Bill’s changes are controversial, nor are all of its FATF-related measures entirely new.
The requirement concerning foreign trustees dealing with South African property, for example, follows amendments already introduced through the General Laws Amendment Act in response to the FATF greylisting. Similarly, beneficial ownership obligations are not being introduced for the first time. The Bill builds on an existing regulatory framework.
The increased oversight of the Master is also understandable. The Chief Master will be required to cause risk assessments to be carried out on trusts, with reference to matters including United Nations sanctions lists and Financial Intelligence Centre Act requirements. Given South Africa’s international obligations and the pressure to address money laundering and illicit financial flows, greater risk-based supervision is difficult to oppose in principle.
The Bill also codifies various aspects of trustees’ powers and duties, including their investment powers. This again has advantages and disadvantages. Codification provides certainty, accessibility and consistency. But the common law has the advantage of being able to evolve. Detailed statutory requirements can become rigid, and there is a risk that trustees will spend their time ticking statutory boxes rather than exercising proper fiduciary judgment.
The proposed annual returns and annual financial statements are similar examples. Trustees will, for the first time, be subject to an express annual reporting obligation, whereas the Master previously had discretion to call trustees to account. Annual financial statements will also become mandatory. Proper financial statements are hardly objectionable and should arguably already have been regarded as good governance. But the cumulative effect is important. Annual returns, beneficial ownership declarations, financial statements and increasingly prescriptive trustee obligations impose a materially greater compliance burden.
One must also ask whether this additional compliance will improve the administration of trusts in any meaningful way. How many additional resources will be required merely to review annual submissions? Will this oversight identify genuinely problematic trusts?
There are also welcome developments. The express recognition of electronic signatures is sensible and reflects modern commercial practice. Trust administration increasingly involves parties operating remotely and across jurisdictions, and there is little justification for unnecessary formalities where secure electronic execution is appropriate.
The Bill’s provisions concerning access to information should also be considered carefully. Trust affairs have traditionally enjoyed a degree of privacy that many journalists complain about. The Bill places access to information held under the Act within the framework of the Promotion of Access to Information Act. This should not, however, be confused with the creation of an open, searchable trust register comparable to CIPC’s public company information. The Bill does not appear to contemplate such a system, although the eventual position will also depend on regulations and subordinate legislation.
The central question, therefore, is not whether trusts should be regulated. Nor is it whether South Africa must respond to the FATF recommendations and the abuse of trusts.
The real question is at what cost. Regulation may close loopholes and improve transparency, but every additional layer of regulation carries a price. In the words of Thomas Sowell, there are no solutions, only trade-offs.
The Bill represents a movement from a relatively flexible private-law structure, regulated by legislation, common law and judicial oversight, towards a system in which the State has a much greater role in determining when private arrangements become legally effective. It is a movement towards greater certainty and transparency, but potentially also towards greater rigidity, administrative dependence and compliance costs.
One has reason to be concerned by the tendency of recent legislation to increasingly distrust citizens’ ability to manage their private affairs without State intervention.
The danger is that, in seeking to prevent the abuse of trusts, we redesign the trust for everyone.
