The statutory framework
The Trust Property Control Act 57 of 1988 deals with this under a section headed Authorization of trustee and security. It begins with the rule that a trustee may act in that capacity only if authorised in writing by the Master.
It then provides that the Master does not grant that authority unless security has been furnished to the Master's satisfaction, or unless the trustee has been exempted from furnishing security by a court order, by the Master, or in terms of the trust instrument. Those are the only routes to authority.
There is a practical proviso. Pending the furnishing of security, the Master may authorise a trustee to perform specified acts, which allows urgent matters to be attended to without the trust being paralysed while the security is arranged.
Source: Trust Property Control Act 57 of 1988, section 6 (Authorization of trustee and security), subsections 6(1) and 6(2).
The Master's power to dispense with security
The dispensing power is worth locating precisely, because it is frequently attributed to the wrong subsection. It sits in section 6(3)(a), not in the subsection dealing with the grant of authority.
That same subsection contains a set of related powers which together give the Master considerable flexibility over the security position across the life of a trust.
The powers are summarised below. They mean the security position is not necessarily fixed at the point of appointment.
The Master's powers over trustee security
- To dispense with security to be furnished by a trustee
- To reduce or cancel security that has already been furnished
- To order a trustee to furnish additional security
- To order a trustee who is exempted from furnishing security in terms of the trust instrument to furnish security
Source: Trust Property Control Act 57 of 1988, section 6(3).
An exemption in the trust instrument is not the last word
Many trust deeds contain a clause exempting the trustees from furnishing security. That clause is effective, and it is the reason a great many South African trustees never encounter the requirement.
It is not, however, conclusive. The Act expressly empowers the Master to order a trustee who is exempted in terms of the trust instrument to furnish security in any event. A drafting clause therefore removes the requirement in the ordinary course but does not remove the Master's discretion.
Where the Master exercises that power, the trustee cannot rely on the deed. The requirement communicated by the Master is what has to be satisfied before authority is granted or continued.
The regulatory environment has changed
Trustee obligations have been expanded significantly in recent years. Amendments introduced in 2022 inserted a series of subsections into the same section of the Act dealing with the disqualification of trustees, and those provisions took effect on 1 April 2023.
That was part of a wider package of amendments addressing beneficial ownership, record-keeping and disclosure obligations for trustees. Those duties sit alongside the security requirement rather than replacing it, and the combined effect is that trusteeship carries meaningfully more compliance obligation than it did a few years ago.
A person considering accepting a trusteeship, or a practitioner reviewing an existing appointment, should establish the current position rather than working from an understanding formed before those amendments.
Source: Trust Property Control Act 57 of 1988, sections 6(1A) to 6(1H), inserted by the General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Act 22 of 2022, published in Government Gazette 47802 of 29 December 2022, effective 1 April 2023.
How a trustee bond is assessed
A guarantor issuing a trustee bond is standing behind an individual administering property for beneficiaries, often over a long period. Because trusts can run for a generation, the exposure is more open-ended than that of a deceased estate that will be wound up.
The nature of the trust property is central. A trust holding a family home and a share portfolio presents a different risk from one holding an operating business, development property or offshore structures. The identity and vulnerability of the beneficiaries also matter, particularly where the trust exists to protect a minor or a person unable to manage their own affairs.
What is normally examined
- The Master's requirement, including the amount of security called for
- The trust instrument, including any exemption clause and the powers conferred on trustees
- The value and composition of the trust property
- Whether the trust holds a business, development property, offshore assets or illiquid interests
- The number of trustees, whether an independent trustee is appointed and how decisions are taken
- The identity of the beneficiaries, particularly where minors or vulnerable persons are involved
- The trustee's personal financial position, credit history and experience of comparable appointments
- The counter-indemnity and any supporting security
The bond protects the beneficiaries, not the trustee
This point is worth stating plainly. The security is furnished to the Master for the benefit of the trust and its beneficiaries. It gives them recourse if the trustee misappropriates trust property, fails to account or administers the trust so poorly that a loss results.
It does not protect the trustee. If the guarantor pays, it will normally recover from the trustee under the counter-indemnity. A professional who accepts trusteeships as part of a practice should treat professional indemnity cover as a separate question, because that is what responds to a claim arising from professional services rendered.
For an independent trustee appointed to a family trust, the combination of an open-ended appointment, expanded compliance duties and personal recourse under a counter-indemnity is worth considering carefully before the appointment is accepted.
Read the legal practices professional indemnity guide →
Related fiduciary appointments
Executors and curators face comparable but separately regulated security requirements under different legislation. A practitioner acting in more than one capacity should look at each appointment on its own terms rather than assuming the position carries across.
Read the court bonds overview →
COMMON QUESTIONS
Trustee bond questions, answered clearly.
What is a trustee bond?
It is security furnished to the Master of the High Court by a trustee, so that the trust and its beneficiaries have recourse if the trustee defaults. It forms part of the framework under section 6 of the Trust Property Control Act 57 of 1988 for authorising a trustee to act.
Can a trustee act before the Master authorises?
No. The Act provides that a trustee may act in that capacity only if authorised in writing by the Master. Pending the furnishing of security the Master may authorise a trustee to perform specified acts, which allows urgent matters to be attended to.
When is security not required?
The Master does not grant authority unless security has been furnished to its satisfaction or the trustee has been exempted, whether by court order, by the Master exercising its dispensing power, or in terms of the trust instrument.
Where does the Master's power to dispense with security come from?
It sits in section 6(3)(a) of the Act. The same subsection also allows the Master to reduce or cancel security already furnished, to order additional security, and to order security from a trustee exempted in terms of the trust instrument.
Our trust deed exempts the trustees from security. Is that the end of it?
Usually in practice, but not as a matter of law. The Act expressly empowers the Master to order a trustee who is exempted in terms of the trust instrument to furnish security in any event. Where the Master does so, the deed clause cannot be relied on.
How is the amount determined?
It follows the value of the trust property under administration. Composition matters too, because a business, development property, offshore assets or illiquid interests introduce complexity beyond the headline value.
Can the security be reduced or cancelled later?
Yes. The Act empowers the Master to reduce or cancel security that has already been furnished, and equally to order additional security. The position is not necessarily fixed at the point of appointment.
Have the obligations on trustees changed recently?
Yes. Amendments effective 1 April 2023 inserted trustee disqualification provisions into the same section, as part of a wider package addressing beneficial ownership, record-keeping and disclosure. Those duties sit alongside the security requirement rather than replacing it.
Does the bond protect the trustee?
No. It protects the trust and its beneficiaries. If the guarantor pays, it will normally recover from the trustee under the counter-indemnity, which for an individual trustee means personal exposure.
Should an independent trustee also have professional indemnity cover?
A practitioner accepting trusteeships as part of a practice should treat that as a separate question. The bond secures the obligations of the appointment through the Master; professional indemnity insurance responds to a claim arising from professional services rendered.
