APPOINTMENT AS INDEPENDENT PROFESSIONAL TRUSTEE
We refer to our appointment as an independent professional trustee on your trust and would like to remind you of the following important points.
What is an independent trustee?
An independent trustee is a person not related to the founder, trustees or beneficiaries of a trust. The independent trustee must at all times be aware of the responsibility he/she accepts with the appointment of trusteeship. The Master of the High Court must consider any person appointed as an independent trustee to be competent before the appointment will be officially approved.
It is important that an independent trustee has the relevant knowledge and expertise in order to administer the trust and make decisions by the trustees with the necessary advice and guidance in order to manage the trust to the benefit of the beneficiaries.
Why is an independent trustee required?
One of the inevitable legal consequences when a trust is created, is that there must be a separation between ownership / control and benefits. The lack of this separation can lead to the trust not being a valid trust, but rather to be seen as an alter ego trust, in other words merely an extension of an individual’s own activities and affairs. The considerations in determining a possible alter ego trust will include, but are not limited to, holding no trustee meetings, decisions taken by a trustee without consulting the other trustees and failure to keep record of any decisions taken by the trustees.
- The removal of trustees from their office;
- The protection offered by the trust can be set aside and the trust can be regarded as a smoke screen and the trust assets may be deemed to be the founder’s, either for creditors or for estate duty purposes, and
- The trustees who fail their duties van be held personally liable for losses suffered by the trust that may adversely affect the beneficiaries.
We therefor wish to emphasize the importance of the appointment of an independent trustee and ASL Trust gladly accepts this appointment.