Trustee Bonds

Understanding the Need for a Trustee Bonds

Trustee bonds are required when someone is appointed to manage trust assets on behalf of beneficiaries. It protects those beneficiaries by ensuring the trustee carries out their duties honestly and in line with legal requirements.

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 authorised 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.

Types of Trusts That May Require a Trustee Bond

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

  • Testamentary trusts: Trusts created in a will that come into effect after a person’s death.
  • Inter-vivos trusts: Trusts created during a person’s lifetime to manage or distribute assets to beneficiaries, such as family trusts.

Security Requirements for Trustee Bonds

The Master does not grant authority to the Trustee unless he/she has furnished security to his/her 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.

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Professional Support for Trustee Bond Applications

Due to the complex administration of a trust involving the strict running of books of account as well as 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 the 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 the 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 emphasises 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:

Cape Town

Les-Lee PeensLes-Lee Peens, insurance specialist, guiding clients on tutor bonds and tutorship vs guardianship

Johannesburg

Claudia Whitaker, insurance consultant assisting with tutor bonds and surety of a minorClaudia Whitaker

Suzan Amando, advisor supporting tutor surety bonds and answering what a tutor isSuzan Amando

Pretoria

Charlene Peddlebury, insurance advisor specialising in tutor bonds and surety of a minorCharlene Pendlebury

Kiewiet Van Wyk, insurance professional specialising in tutor bonds and surety of a minorKiewiet Van Wyk

Port Elizabeth

Janine Grey, advisor helping clients with tutor bonds and tutorship vs guardianship mattersJanine Gray

KwaZulu Natal

Lisa Holdsworth, Durban consultant assisting with trustee bonds and trustee surety bond solutions.Lisa Holdsworth (Durban)

Elsophie Jansen, PMB advisor experienced in trustee bonds and trustee surety bond requirements.Elsophie Jansen (PMB)

Bloemfontein

Lisle Du Bruyn, Bloemfontein consultant working with tutor bonds, tutorship and guardianshipLisle Du Bruyn

Nelspruit

Kiewiet Van WykKiewiet Van Wyk, insurance professional specialising in tutor bonds and surety of a minor

Frequently Asked Questions About Trustee Bonds

Can a trustee act without a trustee bond in South Africa?

No, a trustee cannot act without authorisation from the Master of the High Court, which usually requires a trustee bond or trustee surety bond. In a trustee bond in South Africa, a bond trustee must be formally approved before managing any trust assets.