Settlor control and trustee liability: an analysis of English and offshore trust law with indicators for the development of South African trust law

[摘要] ENGLISH ABSTRACT : The trust, a creature of English law that has found its way into many other legal systems, iswell known as a useful succession and tax planning tool for wealthy individuals. In recentyears, globalised moves towards increased tax transparency and compliance have put pressureon 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 reasonswhy trusts are used have also changed. The focus has, in some cases at least, shifted fromproviding for and protecting beneficiaries to providing a tax efficient vehicle for holding thesettlor's investments.Against this background, this dissertation examines how South African trust law deals withtwo main issues: the increased demand for settlor control over trust assets, as well as thepossibility for trustees to exclude liability for breach of trust. The question arises whether, insuch circumstances, a proper trust remains. The position under South African law is comparedto that under English law and the law of the Channel Island of Jersey, by way of a study oflegal sources including legislation and case law.The dissertation starts with an analysis of the history and state of trust law in the threerelevant jurisdictions and highlights a number of core values that are present in all threejurisdictions. It then continues to examine the duties and obligations of trustees under the lawof these jurisdictions, including the possibility to exclude liability for breach of trust in thetrust deed. Differences between the three jurisdictions are highlighted. The next chapterinvestigates the phenomenon of excessive settlor control and the circumstances in which thiscan lead to either invalidity of the trust or to a court 'going behind the trust, thereby ignoringthe normal consequences of the trust, and applying the trust assets in favour of someone otherthan the beneficiaries.The dissertation concludes that, in certain circumstances, excessive settlor control(particularly where powers and entitlements are combined) and a lack of trusteeaccountability can result in either invalidity or a court going behind the trust. Courts appearreluctant to ignore validly constituted trusts, but it is now accepted that circumstances mayexist where justice and fairness would require such a step. The virtue of trustee independenceemerges as an important counter to the argument of settlor control, and the dissertationproposes that this is an area where South African trust law would benefit from furtherdevelopment.

[发布机构] Stellenbosch University