EXTRACT FROM DECEMBER 2014 NEWSLETTER

By: SD Management Consultants  12-09-2014
Keywords: Accounting & Tax Services

TRANSACTING WITH TRUSTS – BEWARE OF THE PITFALLS In two fairly recent cases, the Supreme Court of Appeal (SCA) has gone out of its way to warn about some of the legal dangers facing people who transact with trusts. These dangers relate mainly to the capacity of the trust to conclude the transaction and the authority of a trustee to bind the trust. Without going into the details of each case those who contemplate contracting with a trust should, before committing themselves to the deal, take the following elementary precautions: • insist on seeing Letters of Authority from the Master authorising the trustees to act as such; • insist on seeing the trust deed itself, to make sure that the board of trustees is properly constituted and has the capacity to enter into the type of contract in question; and • check that all internal formal or procedural requirements have been met, particularly as regards the granting of authority to a particular trustee to enter into and sign the contract on behalf of the trust. An assurance from the co-trustees that the contracting trustee has the necessary authority will usually suffice, since that will preclude the board from subsequently denying his or her authority. By the same token, trustees who conclude contracts on behalf of the trust should ensure not only that they have the necessary authority to do so, but also that there is strict compliance with all the provisions of the trust deed.

Keywords: Accounting & Tax Services

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