A trust does not automatically provide asset protection.

This is one of the most important points to understand before establishing a trust.

The fact that an asset is registered in the name of a trust does not, by itself, mean that the asset is immune from claims or that the trust will always be respected as separate from the persons who established or administer it.

The manner in which the trust is established and administered is important. Trustees must understand and respect the distinction between trust property and their personal property and must exercise their powers in accordance with the trust deed and their fiduciary duties.

The Trust Property Control Act specifically provides that trust property does not form part of a trustee’s personal estate, except to the extent that the trustee is also entitled to the property as a beneficiary. The Act also requires trust property to be properly identified as trust property.

Accordingly, asset protection should not be regarded as an automatic consequence of establishing a trust. It is a matter that requires proper legal advice based on the particular circumstances.

Is a trust a way to save tax?

Another common misconception is that a trust automatically provides tax savings.

It does not.

Trust taxation in South Africa is a specialised area and depends on the nature of the trust, the income or capital gains involved, distributions or vesting in beneficiaries, and the application of the relevant provisions of the Income Tax Act.

Certain qualifying special trusts are taxed differently. Depending on the circumstances, income may also be taxed in the hands of the donor or beneficiary.

Capital gains tax may also arise, and the tax consequences of transferring assets into a trust should be considered before the transaction is undertaken.

Importantly, the tax treatment of trusts is subject to legislative change. SARS introduced further trust-related changes for the 2026 tax year, including amendments concerning the taxation of trusts and beneficiaries.

A trust should therefore not be established solely as a tax-saving mechanism. Tax consequences should form part of the overall advice when considering whether a trust is appropriate.

What responsibilities do trustees have?

Being appointed as a trustee is a significant legal responsibility.

The Trust Property Control Act requires a trustee, in performing their duties and exercising their powers, to act with the care, diligence and skill reasonably expected of a person who manages the affairs of another.

Trustees must understand:

• the terms of the trust deed;
• the limits of their powers;
• their fiduciary duties;
• the interests of the beneficiaries;
• the distinction between trust property and personal property;
• the trust’s accounting and record-keeping requirements; and
• the trust’s legal and tax compliance obligations.

Trustee decisions should be properly considered and documented. Trust property should be separately identified and administered, and trustees should not use trust assets as though they were their own.

Trust administration and compliance

Establishing a trust is only the beginning.

A trust has continuing administration and compliance obligations. These may include maintaining proper records, recording trustee decisions, managing trust assets appropriately, dealing with tax obligations and keeping information concerning the trust and its beneficial owners up to date.

The Trust Property Control Act now contains specific beneficial-ownership requirements. Trustees must establish and record the beneficial ownership of the trust, maintain the prescribed information, lodge the required register with the Master, and keep the information up to date.

The Master of the High Court has confirmed that these requirements have been in operation since 1 April 2023 and that reporting beneficial ownership information to SARS does not replace the separate obligation to report the information to the Master.

This means that trust administration has become considerably more formal and compliance-focused than it was in the past.

Trusts and SARS

Trustees also have ongoing tax responsibilities.

SARS confirms that all trusts must register for income tax and that the trustee is the representative taxpayer of the trust. Trusts are required to submit annual income tax returns, subject to the applicable requirements.

SARS has also increased enforcement of trust tax compliance. From 2026, administrative penalties may be imposed for outstanding trust income tax returns, and SARS has emphasised that trustees remain responsible for ensuring that the trust’s tax information is accurate and up to date.

Professional assistance with the administration of a trust does not transfer the trustees’ legal responsibility to comply with their obligations.

How WJ Mayhew Attorneys can assist

At WJ Mayhew Attorneys, we assist clients with estate planning, trusts, and related estate matters.

We can assist with considering whether a trust is appropriate, establishing, and structuring trusts, reviewing trust arrangements and advising trustees on matters arising from the administration of a trust.

Our approach is to consider the client’s circumstances and objectives as a whole before recommending an appropriate structure.

If you are considering establishing a trust, or would like to review an existing trust, obtaining legal advice at an early stage can help ensure that the structure is appropriate for its intended purpose and that its legal and administrative requirements are properly understood.

Important notice

The information contained in this article is provided for general information purposes only and does not constitute legal, tax or financial advice. Trust law and taxation are subject to legislation, case law and regulatory requirements that may change. Each person’s circumstances are different, and professional advice should be obtained before establishing a trust, transferring assets to a trust, or taking any action based on the information contained in this article.