The Trusts Bill Sets A Tougher Course For Trust Regulation

The Regulation of Trusts Bill, 2026 has been presented as the long-awaited replacement for the Trust Property Control Act 57 of 1988. It may appear to be a legislative update intended to modernise trust administration and reflect developments in the law since the current framework was enacted nearly four decades ago. Its scope extends well beyond modernisation.

The Bill proposes a more demanding system of reporting, enforcement and supervision. Trusts would no longer be regulated primarily as private fiduciary arrangements. They would be treated as regulated legal vehicles subject to ongoing monitoring.

The Trust Property Control Act already requires trustees to establish, record and lodge beneficial ownership information with the Master’s Office. Section 1 of the Bill broadens the definition of “beneficial owner” beyond founders, trustees and beneficiaries named in the trust instrument. It would also include natural persons who ultimately own or exercise effective control over relevant juristic persons or partnerships, as well as “each beneficiary that is identifiable, despite not being referred to by name” in the trust instrument or other founding instrument.

Section 23 requires trustees to update the beneficial ownership record and prescribed information within 10 days of a change. The change must also be lodged with the Master’s Office within 10 days after it occurs. Trusts with large or frequently changing beneficiary groups will need systems capable of identifying and recording these changes within a short period.

The Bill also brings trusts more firmly within South Africa’s anti-money laundering and counter-terrorist financing framework. It requires the Chief Master to assess the domestic and international money laundering and terrorist financing risks presented by trusts on an ongoing basis. Risk profiles must be developed for different categories of trusts and reviewed periodically. This places trust supervision within South Africa’s wider financial crime prevention system and allows different categories of trusts to be regulated according to their risk profiles.

The Master currently performs a largely administrative function under the Trust Property Control Act. The Bill would move the Master into a more active supervisory role, with powers to:

• Investigate trust administration
• Compel the production of documents and records
• Appoint investigators
• Appoint independent trustees
• Issue compliance notices
• Impose administrative fines
• Remove and disqualify trustees
• Maintain public registers of disqualified trustees
• Issue directives and guidelines
• Conduct money laundering and terrorist financing risk assessments

Section 12(3) allows investigations to be initiated by the Master or at the request of founders, beneficiaries, trustees and other interested parties. If an investigation provides reasonable grounds to suspect that an offence has been committed, section 12(7) requires the investigator to report the suspicion to the Provincial Section Head of the Commercial Branch of the South African Police Service.

Enforcement may begin with a compliance notice under section 33, followed by an administrative fine under section 34. Specified contraventions constitute offences under section 35. Failure to meet a regulatory obligation could ultimately lead to an administrative fine, personal liability, disqualification or criminal sanction.

Administrative fines must be paid personally by trustees and may not be recovered from trust property. Non-compliance could expose a trustee to direct financial loss. The Bill also expands the criminal offence provisions. Penalties may arise from:

• Acting without proper authority
• Failing to maintain trust records
• Failing to meet beneficial ownership requirements
• Failing to maintain proper trust accounts
• Providing incorrect beneficial ownership information
• Failing to meet document retention requirements
• Failing to pay certain administrative fines

Several offences carry penalties of up to R10 million or five years’ imprisonment, or both.

Section 10(4) permits the Master to appoint an independent trustee after consulting the trustees and beneficiaries with vested rights in the trust property. The appointment may be made to separate control from the enjoyment of trust property where:

• All the trustees are beneficiaries of the trust
• All the trustees are related to one another
• The trust conducts business or trading activities with third parties that create obligations to those parties

This provision is aimed at the traditional family trading trust, where family members control the trust while also benefiting economically from it. An independent trustee would separate control from enjoyment and strengthen fiduciary governance where the trust’s activities create obligations to third parties.

The Bill also brings trust administration closer to the compliance environment that applies to companies. The current system focuses mainly on trustee authorisation and fiduciary conduct. The proposed legislation adds a recurring compliance cycle that includes:

• Annual financial statements
• Annual returns
• Beneficial ownership reporting
• Document retention obligations
• Ongoing regulatory oversight
• Compliance monitoring
• Enforcement mechanisms

All trusts would generally be required to prepare annual financial statements and submit annual returns to the Master. A trust may be exempt where the aggregate inflows and outflows of trust property during the financial year do not exceed thresholds determined by the Minister by notice in the Gazette, unless the trust instrument requires the preparation of financial statements. A trust remains legally distinct from a company, but its reporting and compliance obligations would begin to resemble those found in the corporate environment.

Professional trustees, including attorneys, accountants, fiduciary practitioners and financial professionals, face added exposure under the Bill. The proposed standard requires trustees to exercise the care, diligence and skill expected of a fiduciary, taking into account any special expertise they possess or claim to possess. Professional trustees could be assessed against the standards of their professions as well as the baseline fiduciary standard. Their professional status may accordingly increase the standard against which their conduct is judged rather than simply support their appointment.

The changes also have implications for companies that use employee share scheme trusts, broad-based employee ownership structures and other trust-based incentive arrangements. Employees, executives and directors often serve as trustees of these structures while holding operational roles within the business.

Broader beneficial ownership requirements, annual returns and increased compliance obligations could place a substantial administrative burden on employee share scheme trusts, particularly when beneficiaries change frequently as employees join or leave the organisation. Meeting the 10-day reporting period may require closer coordination between the trustees and the teams responsible for employee and scheme records.

The Regulation of Trusts Bill, 2026 is not yet law, and parts of the proposed framework will depend on regulations. Existing trustee governance and compliance reviews should now extend to how quickly beneficial ownership changes can be identified and lodged, whether reporting responsibilities are clear and whether the trustee composition could prompt the appointment of an independent trustee.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.