Important Fiduciary update

It has been a challenging period for fiduciary practitioners, Louis. Can you elaborate?

As the only body solely focused on fiduciary practitioners in SA, FISA is abreast of the fiduciary landscape, lobbying and making input where necessary, and communicating back to members how best to navigate the changes, to the benefit of their clients. Challenges in this landscape are par for the course.

1. The Good, the Bad and the Ugly

The situation with the industry’s primary regulator, the Master of the High Court, can probably best be described with reference to the classic spaghetti western, the Good, the Bad and the Ugly.

The good is the fact that the Master has embraced technology and introduced an online deceased estate reporting platform which has the potential to have letters of executorship (LEs) issued within days of reporting and handing in the original last will at the nearest Master’s Office. While some practitioners have experienced great service from some Master’s Offices, it is a bit of a mixed bag. The electronically produced LEs contain a QR code making it possible to verify the identity of the executor on the Master’s web portal. This goes some way to limit the scope for fraud through fake LEs which started to become a problem in recent years.

The bad is the lack of consistency in the application of legislation by different Master’s Offices and sometimes within the same office. Add to this that SARS has a substantial backlog with estate duty assessments and that some functionaries in some Master’s Offices have, quite outside their powers, refused permission to advertise the liquidation and distribution account in deceased estates in the absence of an estate duty assessment.

The ugly is the situation with trust files and the lack of access to those in the Pretoria Master’s Office. Also, the Department of Home Affairs systems being offline and crippling the good above remains an issue.

2. Trust and company service providers as accountable institutions

During 2023, Schedule 1 to the Financial Intelligence Centre Act, 38 of 2001 (FICA), was amended substantially. This included a newly formulated Item 2 dealing with “Trust and Company Service Providers.” The definitions for those who are delivering trust services are to be found in paragraphs (c) and (d) of Item 2:

“(c) A person who carries on the business of creating a trust arrangement for a client.

(d) A person who carries on the business of preparing for or carrying out transactions (including as a trustee) related to the investment, safe keeping, control or administering of trust property within the meaning of the Trust Property Control Act, 1988 (Act 57 of 1988).”

Anyone or any business who falls within these definitions is under the obligation to register with the Financial Intelligence Centre (FIC) as an accountable institution under FICA, with all the relevant obligations. Anyone who is already an accountable institution under FICA in another area of business must nevertheless register separately as a financial institution again if falling within these definitions.

It is not at all clear what exactly is included in the “…business of creating a trust arrangement …” and whether that includes the incidental drafting of trust deeds in the process of conducting estate planning for a client, without being involved in the registration of such a trust with the Master of the High Court.

On a strict reading of paragraph (d) it could be argued that the fund manager with whom trust money is invested should register separately under paragraph (d) as a “trust and Company Service Provider as well.

Please tell us about the upcoming FISA Conference

The 14th Annual FISA Conference will be held on 11 September at the Sandton Convention Centre. The conference, as in previous years, aims to strike a balance between academic theory and practical application. The theme this year is “Certainty in uncertain times.”