What are the legal requirements to deregister a Trust?
Termination of a trust can occur through various means, such as legal operation, achievement of trust objectives, destruction of trust property, or beneficiary renunciation. Regardless of whether it is an inter vivos or testamentary trust, it is crucial to review the trust deed, including any amendments, as it typically outlines provisions for deregistration and termination, along with the specific process and conditions involved.
Before proceeding with deregistration, trustees must settle all financial obligations, including outstanding taxes, debts, or liabilities. Additionally, they must obtain any necessary tax clearances. Furthermore, beneficiaries must receive their entitled benefits or provide consent for the termination and deregistration to proceed.
What happens when a trust is terminated?
The Master will undertake the deregistration process, which involves requesting specific documentation from the trustee(s). Once the required documents are submitted, the Master will close the trust file.
What documents will the Master need to deregister the Trust?
To facilitate the deregistration of a trust, the following documents are typically required by the Master:
1. An originally signed resolution by the trustees, outlining key information about the trust:
a) Indicate whether the trust was dormant or active.
b) Confirm distribution of trust assets to beneficiaries.
c) Affirm that all trust assets have been divested.
d) Specify if the trust terminated after a certain period or upon the occurrence of a specific event.
e) Declare achievement of the primary objective or the impossibility of its attainment.
f) Confirm closure of any bank account held in the trust’s name, if applicable.
2. The original letter of authority.
3. A bank statement reflecting a nil balance for the trust, the final statement before account closure, or a closure confirmation letter from the bank.
Once the Master has confirmed the deregistration of the trust and informed the trustees that his file is closed, the Master must direct the attention of the trustees to the provisions of Section 17 of Trust Property Control Act 57 of 1998 which states:
“A trustee shall not without the written consent of the Master destroy any document which serves as proof of the investment, safe custody, control, administration, alienation or distribution of trust property before the expiry of a period of five years from termination of a trust.”