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How much may Trustees pay themselves?

Trustees manage the trust assets on behalf of the beneficiaries and must act with skill, due care and in good faith and, but their work is not always justly rewarded.

Section 22 of the Trust Property Control Act provides that trustees shall be entitled to the remuneration for the execution of their official duties provided for in the trust instrument or, where no such provision is made, to a reasonable remuneration, which shall in the event of a dispute be fixed by the Master.

Older Trust Deeds sometimes give the founder the power to approve or limit trustee remuneration, but this may imply that the founder has too much control over the Trustees and it is therefore not advisable to allow the founder to decide on trustee remuneration.

When drafting a Trust Deed or amending an existing Trust Deed, care should be taken to provide for reasonable trustee remuneration.

This can be done by fixing remuneration as a percentage of the trust assets under administration, or by simply providing for reasonable remuneration, to be determined by the Trustees. The Trustees should then take into account factors such as the nature and value of the trust assets, the degree of difficulty involved in performing their management task, the frequency of trustee meetings, and fees regarded as reasonable and market related.

In the case of Griessel v Bankkorp Trust Bpk 1990(2) SA 328 (O) 334-335 the court said the following in this regard:

“Iemand wat dit nie sy beroep maak om die dienste te lewer nie, is nie op ‘n gebruiklike vergoeding geregtig nie, maar slegs redelike vergoeding.

Aan die hand van die bogemelde beginsels meen ek dat mens die regsposisie, waar die omvang van die administrateur se vergoeding nie bepaal is nie, soos volg moet konstrueer:

(a)   As die administrateur ‘n vriend of familielid is, of iemand anders wat dit nie sy besigheid maak om dié soort dienste as ‘n besigheid te beoefen nie, is daar geen gebruiklike tarief nie, en moet die loon bepaal word volgens wat redelik is. Dit sal waarskynlik bepaal word nie op ‘n persentasie basis nie, maar op die basis van vergoeding van uitgawes en vir tyd bestee.”

If you are a trustee in need of advice about whether you are entitled to remuneration, or a beneficiary worried that the trustees’ remuneration is excessive, please contact our Trust and Estates Department for assistance.