Department of Private Law

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Browsing Department of Private Law by Author "Bruwer, Elizabeth"

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    Settlor control and trustee liability: an analysis of English and offshore trust law with indicators for the development of South African trust law
    (Stellenbosch : Stellenbosch University, 2018-12) Bruwer, Elizabeth; De Waal, M. J.; Stellenbosch University. Faculty of Law. Dept. of Private Law.
    ENGLISH ABSTRACT : The trust, a creature of English law that has found its way into many other legal systems, is well known as a useful succession and tax planning tool for wealthy individuals. In recent years, globalised moves towards increased tax transparency and compliance have put pressure on the use of trusts, particularly on so-called “offshore trusts”. In addition, due to economic, financial and socio-economic changes over the last 50 years, the ways in which and reasons why trusts are used have also changed. The focus has, in some cases at least, shifted from providing for and protecting beneficiaries to providing a tax efficient vehicle for holding the settlor’s investments. Against this background, this dissertation examines how South African trust law deals with two main issues: the increased demand for settlor control over trust assets, as well as the possibility for trustees to exclude liability for breach of trust. The question arises whether, in such circumstances, a proper trust remains. The position under South African law is compared to that under English law and the law of the Channel Island of Jersey, by way of a study of legal sources including legislation and case law. The dissertation starts with an analysis of the history and state of trust law in the three relevant jurisdictions and highlights a number of core values that are present in all three jurisdictions. It then continues to examine the duties and obligations of trustees under the law of these jurisdictions, including the possibility to exclude liability for breach of trust in the trust deed. Differences between the three jurisdictions are highlighted. The next chapter investigates the phenomenon of excessive settlor control and the circumstances in which this can lead to either invalidity of the trust or to a court “going behind the trust”, thereby ignoring the normal consequences of the trust, and applying the trust assets in favour of someone other than the beneficiaries. The dissertation concludes that, in certain circumstances, excessive settlor control (particularly where powers and entitlements are combined) and a lack of trustee accountability can result in either invalidity or a court going behind the trust. Courts appear reluctant to ignore validly constituted trusts, but it is now accepted that circumstances may exist where justice and fairness would require such a step. The virtue of trustee independence emerges as an important counter to the argument of settlor control, and the dissertation proposes that this is an area where South African trust law would benefit from further development.