For almost four decades, South African trusts have operated within the framework established by the Trust Property Control Act 57 of 1988 (“the TPC Act”). During that period, trusts have become an integral part of South Africa’s private wealth landscape, particularly in the areas of estate planning, asset protection, succession planning and the intergenerational preservation of family wealth.
However, the regulatory environment in which trusts operate has changed considerably since 1988.
South Africa is now operating in an environment characterised by increased international scrutiny, beneficial ownership transparency, anti-money laundering obligations and far greater expectations around governance and accountability.
Against this background, the Draft Regulation of Trusts Bill, 2026 (“the Bill”) proposes a fundamental reform of South African trust law.
Rather than simply amending the existing TPC Act, the Bill proposes to repeal it and introduce an entirely new statutory framework governing trusts.
This represents more than a legislative update. It signals a significant shift in the way trusts will be regulated and administered in South Africa.
From passive supervision to active regulation
One of the most important features of the Bill is the move towards ongoing regulatory oversight.
Historically, the Master’s involvement with many trusts has been largely administrative, particularly at establishment and when trustees are appointed or replaced. The proposed framework introduces a much more active compliance environment.
Trustees will be expected to maintain comprehensive records, comply with prescribed reporting requirements and, subject to the applicable exemptions and thresholds, prepare annual financial statements and submit annual returns.
The practical message is clear: a trust cannot simply be established, registered with the Master and thereafter left largely unattended.
The Bill envisages trusts as actively administered legal structures requiring continuous governance and oversight.
For trustees, this will inevitably mean increased administration and, in many cases, increased professional costs.
Greater certainty around the creation of a trust
The current TPC Act provides relatively limited statutory guidance on the requirements for establishing a valid trust. Over time, the common law and judicial decisions have therefore played a significant role in determining whether a valid trust has been created.
The Bill seeks to provide greater statutory certainty.
Among other requirements, there must be:
- A clear intention to establish a trust;
- Identifiable trust property;
- Identifiable beneficiaries or a lawful trust purpose; and
- Properly appointed trustees.
The Bill also expressly addresses the separation between trusteeship and beneficial entitlement by providing that a sole trustee may not simultaneously be the sole beneficiary.
Where the statutory requirements for the establishment of a trust are not satisfied, a court may be required to determine whether the purported trust is valid.
This should provide greater certainty for practitioners and trustees, while also reducing the scope for disputes concerning the very existence of a trust.
Family trusts and the need for independence
The treatment of family trusts is likely to be one of the more significant areas of change.
South African courts have repeatedly emphasised that trustees must exercise their powers independently and cannot simply treat trust assets as though they were their personal property.
This distinction is particularly important in family trusts, where the founder, trustees and beneficiaries are often closely connected.
The Bill gives the Master additional powers in circumstances where concerns arise regarding trustee independence. In certain circumstances, including where trustees are related, are beneficiaries and the trust conducts business with third parties, the Master may appoint an independent trustee.
The policy objective is understandable: trust assets should be administered in accordance with the trust deed and for the benefit of the beneficiaries, rather than effectively being controlled as an extension of the founder’s personal estate.
For existing family trusts, this makes it increasingly important to consider whether the governance structure reflects genuine separation between the trust and the individuals who established or benefit from it.
Beneficial ownership: Transparency becomes central
The introduction of beneficial ownership requirements has already changed the compliance landscape for South African trusts. The Bill takes this considerably further.
Trustees will be required to establish and maintain detailed information concerning the individuals who ultimately own, benefit from or exercise control over the trust, with changes to this information subject to prescribed reporting periods.
This reflects South Africa’s broader obligations relating to financial transparency, money laundering, tax evasion and the prevention of the misuse of legal structures to conceal ownership or assets.
For legitimate family trusts, these measures do not necessarily change the underlying purpose of the trust. They do, however, mean that privacy can no longer be regarded as synonymous with secrecy.
Trustees will need to be able to demonstrate who the relevant parties are, how the trust is governed and who ultimately benefits from or exercises control over the trust.
The professionalisation of trusteeship
The Bill reinforces the principle that trustees are fiduciaries and must actively discharge their responsibilities.
The existing requirement for trustees to act with care, diligence and skill remains central, but the Bill recognises that the standard expected of a trustee may depend on that trustee’s knowledge and expertise.
This is particularly relevant where a trustee holds professional qualifications or has specialist expertise.
An attorney, accountant, tax practitioner or professional fiduciary who accepts appointment as a trustee cannot necessarily expect to be judged by the same standard as an individual with no relevant experience.
The appointment of a trustee therefore carries real responsibility.
A trustee is not simply an administrative signatory. Trustees are expected to understand the trust’s affairs, exercise independent judgement, properly consider decisions and act in accordance with their fiduciary duties.
Annual financial statements and returns
For many existing trusts, the proposed annual reporting requirements may represent the most significant practical change.
The Bill provides for annual financial statements, subject to prescribed exemptions, together with annual returns to the Master.
This will have particular implications for dormant or low-activity family trusts, many of which have historically operated with relatively limited formal administration.
Trustees will need to consider whether the trust has appropriate accounting records, supporting documentation and governance processes in place to meet these requirements.
While this will undoubtedly increase the compliance burden, the counterargument is that regular reporting creates a more transparent and accountable trust environment and gives the Master greater visibility over the trusts falling within its jurisdiction.
Stronger enforcement powers
The Bill also strengthens the Master’s ability to address non-compliance.
Rather than relying primarily on court proceedings, the proposed framework introduces compliance notices and administrative penalties.
A trustee may first be given an opportunity to remedy a contravention. Failure to comply may then result in financial penalties.
This is significant because it gives the regulator a more practical enforcement mechanism and potentially makes non-compliance considerably more costly.
Trustees should therefore not regard trust compliance as a purely administrative matter. The consequences of failing to comply are becoming materially more serious.
Personal liability and criminal sanctions
The Bill goes further by creating a number of offences and imposing potentially substantial sanctions.
These include contraventions relating to matters such as:
- Acting without proper authority;
- Failing to maintain required trust records;
- Providing inaccurate beneficial ownership information;
- Failing to operate appropriately designated trust accounts; and
- Failing to comply with prescribed reporting requirements.
Certain offences may result in significant fines, imprisonment or both.
This represents a fundamental change in emphasis.
Trustees will increasingly need to appreciate that non-compliance is not merely a matter between the trustee and the Master. In serious cases, individual trustees may face personal consequences.
Protection of vulnerable beneficiaries
The Bill also recognises the particular vulnerability of beneficiaries who are minors or persons whose interests arise from court-awarded damages.
It introduces additional safeguards in relation to trusts established to hold such assets, including consideration of whether the trust structure is genuinely in the beneficiary’s interests and whether trustee remuneration is reasonable.
This is an important development in ensuring that the trust structure itself does not become a source of financial disadvantage for the very beneficiary it was intended to protect.
What should existing trusts be doing now?
The Bill is still in draft form and its final provisions may change before legislation is enacted.
Nevertheless, trustees should not wait until the legislation is effective before considering the implications.
Existing trusts should increasingly be viewed through a governance and compliance lens.
Trustees should consider whether:
- The trust deed remains appropriate;
- Trustee appointments and decision-making processes are properly documented;
- Beneficial ownership information is complete and current;
- Trust records are properly maintained;
- Accounting records are adequate;
- Trust assets and transactions are clearly distinguished from those of the trustees and beneficiaries; and
- The trust is being administered consistently with its deed and fiduciary obligations.
For some trusts, this review may identify nothing more than administrative improvements. For others, it may expose structural or governance weaknesses which should be addressed proactively.
The end of the informal trust?
Perhaps the most significant aspect of the Bill is not any single provision, but the broader change in regulatory philosophy.
The TPC Act was enacted in a very different regulatory environment. The modern trust operates within a far more sophisticated framework of tax reporting, beneficial ownership disclosure, anti-money laundering requirements and international transparency standards. The proposed Bill reflects that reality.
The direction of travel is unmistakable - less informality, more accountability.
For beneficiaries, this should provide greater protection. For regulators, it provides stronger tools to identify and address abuse. For professional trustees and advisers, it creates a more clearly defined governance framework.
For trustees of family trusts, however, the message is perhaps the most important.
The days of treating a trust as a document that sits in a filing cabinet, with little administration between major life events, are coming to an end.
A trust is a legal structure. Its integrity depends not only on the wording of the trust deed, but on how that structure is administered in practice.
If enacted in anything approaching its current form, the Draft Regulation of Trusts Bill will represent the most significant development in South African trust regulation since the introduction of the TPC Act nearly 40 years ago.
For trustees, beneficiaries and advisers alike, now is the time to start preparing for that new era.
