Blue Chip Issue 96

BLUECHIPFINANCIAL

BLUECHIPFINANCIAL PLANNING | Estate planningThe hidden dangers of being atrustee: are you or your clients exposed?The old excuse that the Master’s Office is a mess and that nobody’s checking won’t protect you any more.You may have agreed to act as a trustee, perhaps motivatedby loyalty or a sense of duty. By now you’ve likely realisedthat South Africa’s grey listing triggered a storm of regulatoryenforcement. Your role as trustee has now become aminefield – none of which you initially signed up for. Trusteesinadvertently tend to neglect their obligations, which will leave themopen to attack with drastic consequences, especially after the recentlegislation changes.Where do the risks lie?You are exposed on two fronts:1. Statutory compliance1.1. Trust Property Control Act (TPCA)For the first time, TPCA introduces significant penalties for noncompliance– including fines of up to R10-million and/or imprisonmentfor up to five years – even for what may appear to be minor oversights.In addition, onerous data recording and reporting requirements havebeen implemented, with an obligation to report timeously to theMaster and other relevant authorities.1.2. South African Revenue Service (SARS)Furthermore, it is now undoubtedly clear that a focus area of SARS isnon-compliance of trusts and therefore all trustees are urged to ensurethe trusts on which they serve as trustees are compliant. The increaseddisclosure obligations and increased audit intensity by SARS will resultin higher compliance time and, therefore, costs to effectively manage atrust. Layer in SARS’s growing integration with the Master’s Office andreal-time AI cross-checking; this is no longer just paperwork.1.3. Financial Intelligence Centre (FIC)In many cases, trustees are unaware that they qualify as an accountableinstitution – providing services (advising, accounting and administrativefunctions) to a trust may classify them as a trust service provider.This means they face serious and escalating legal risks from FIC,which is armed with new enforcement powers. Fines of R10-million toR50-million or even 15 years’ imprisonment are on the table.If you’re still treating trust administration as an afterthought, youand your clients are exposed.2. Fiduciary liabilityThis is not new, but trustees are increasingly being sued. Messydivorces, disgruntled beneficiaries or even third parties like banksare turning to trustees for recourse, often targeting the one with thedeepest pockets, which could be you. You can be held personally liable,even for what seems like minor negligence, like signing a resolutionyou didn’t fully understand. Worse still, you can’t control the actions ofyour co-trustees, even though you could be jointly liable. You cannotafford to be passive or a “puppet” trustee – signing resolutions withoutunderstanding or, worse, disengaging entirely. Negligence includesnot knowing what you ought to know.So, what are your options?You could resign, but who would want to take your place?How do you balance compliance and manage legal obligationswhile ensuring a good night’s sleep? That’s exactly what we offer.Mella Fiduciary provides a professional, behind-the-scenes trustadministration solution that removes the administrative and legalstress from your role as trustee no matter where you are in the country.You can remain a trustee with confidence, knowing your complianceis taken care of – or, if preferred, appoint us as independent trusteesand step away from the risk.Mella Fiduciary offers a full trust administration service:• Trust deed health check and amendments• Trust financials and submission of tax returns• Regular, professional communication with client’s family• Full compliance• Cutting-edge technology-enabled deliveryIn addition to trust administration, Mella Fiduciary also administersdeceased estates. We apply the same disciplined approach todeceased estate administration. Our team manages the entire processquietly, professionally and we ensure your client remains connectedto you throughout the process. Our goal is to make you look good infront of your clients.ConclusionBy partnering with Mella Fiduciary, you stay in the client’s innercircle – but offload the risk and paperwork to professionals wholive and breathe fiduciary administration. Our business exists tosupport financial planners and wealth managers, not compete withthem. We manage the complexity, so you can stay focused on whatmatters most.(Left) Nikki Moore, Director and Business Manager, MellaFiduciary. (Middle and right) Lisa Praschma and Linda Stonier,Directors, Mella Fiduciary.64 www.bluechipdigital.co.za

BLUECHIP083 384 4873 or nikki@mellafiduciary.co.zawww.bluechipdigital.co.za 65