Trustee Bond

Understanding the Need for a Trustee Bond

In what context would a person need a trustee bond? Who gets appointed as trustees? In terms of the Trust Property Control Act 57 of 1988, persons appointed as Trustees, either via a trust instrument or court, must obtain a trustee bond and are only legally authorized to act in that capacity after being formally appointed by the Master of the High Court. To be appointed by the Master as a Trustee, he/she has to make an application to the Master, who will issue a document known as a Letter of Authority. No Trustee has powers or may commence administration of any trust property before obtaining the written authority of the Master.

Various types of trusts can be created, each suited to a specific set of circumstances, and examples include:

Trusts created in a Will that come into effect upon death - Testamentary Trusts
Inter-vivos trusts, are created during a person's lifetime to distribute assets to beneficiaries, eg Family Trusts, and Trusts.

The Master does not grant authority to the Trustee unless he/she has furnished security to his satisfaction for the due and faithful performance of his/her duties as Trustee or he /she has been exempted from furnishing security by court order or the Master.

Where Trustees are required to furnish security, they will be requested to provide a security bond also known as a suretyship or a ‘surety bond’ by an authorised Insurer. The provision of the suretyship is not an indemnity policy but rather an accessory agreement by which the surety bond binds itself to the Master for the Trustee's performance whilst in office. As with all suretyships, should the principal debtor (Trustee) default and the surety have to make good any loss arising from such default, the surety has a right of recourse against the Trustee for that amount which it has paid to the Master.

complete an application form

instant surety bond estimate

Due to the complex administration of a trust involving the strict running of books of account as well as the keeping up with ever changing tax and other relevant legislation and case law, such appointments should be taken by professionals, with the necessary expertise in administering trusts. Where non-professional Trustees are appointed and are required to provide a trustee surety bond to the Master, Shackleton Risk requires that he/she be assisted by a professional in his/ her duties to minimise any risk of negligent act, error or omission arising and causing a loss to beneficiaries. Trustee bonds are provided via leading local insurance companies and may be lodged by us with the Master of the High Court on your behalf should you require us to do so. This ensures that bonds and trusts are managed with the highest level of care and expertise.

Steps to Secure a Trustee Bond in South Africa

Non-professional Trustee

An approved joint application for facility
Master's Form J344 (Undertaking)
Your ID
Copy of the Trust Deed or Court order (as the case may be)
Master's Form J417 (Acceptance of Trusteeship)
Details of the professional who will be assisting you with the administration of the trust
An Undertaking from the professional to notify us if his/ her mandate has been terminated by you
A suretyship guaranteeing your performance jointly with the surety to the Master of the High Court.

Professional Trustee

An approved application for facility
Form J344 Undertaking
Your ID
Copy of the Trust Deed or Court order (as the case may be)
Form J417 Acceptance of Trusteeship
Proof of active professional indemnity insurance

When considering the costs associated with trustee bonds in South Africa, the Master of the High Court sets the premiums. Trustees can expect an annual rate of 0.6% plus VAT on the estate's asset value, with the option for yearly renewal throughout the trust's existence. This requirement emphasizes the trustee bond's role in providing financial security and legal legitimacy for trustees, ensuring they meet security bond requirements and uphold their responsibilities towards trust bonds in South Africa effectively.

For more information on Trustee bonds or to set up a consultation, please contact your local Shackleton Risk broker: