Appleton MD, Lauren Hean, talks us through the important issue of testamentary trusts
The True Costs of Creating and Administering a Testamentary Trust in South Africa
What is a testamentary trust?
A testamentary trust is created in terms of a valid Will, coming into effect only upon the death of the testator. Unlike inter vivos trusts (which are set up during one’s lifetime), a testamentary trust is established automatically once the deceased estate is reported and the Master of the High Court appoints the trustees.
Its primary purpose is to hold and manage assets on behalf of beneficiaries who may be minors, financially inexperienced or otherwise unable to manage the assets themselves.
Ongoing administration costs
Once registered and operational, a testamentary trust incurs recurring administrative and compliance expenses.
- Trustee Fees
Professional trustees charge annual fees, which may be structured as:
- A fixed amount per year (often R2,000 – R10,000 for smaller trusts)
- A percentage of trust assets (common for corporate fiduciaries)
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Fees for specific attendances, resolutions or specialised engagements
Highly active trusts or those holding valuable assets may incur significantly higher fees.
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Accounting and financial statement fees
Annual financial statements are mandatory. Costs typically range from:
- R5,000 – R15,000+ per year, depending on complexity and the trust’s level of activity.
- Dormant or low-activity trusts may incur lower costs, largely for basic bookkeeping and tax submissions.
- Tax compliance costs
Trusts are distinct taxpayers and must file annual income tax and provisional tax returns.
Typical costs: R2,000 – R10,000+ per year, depending on activity level and service provider.
If a practitioner must attend SARS appointments, additional fees (e.g., R1,500 plus VAT) may be charged.
Total Estimated Annual Administration Costs Over the Life of the Trust
- Trustee fees: R2,000 – R10,000+
- Annual financial statements: R5,000 – R15,000+
- SARS tax submissions: R2,000 – R10,000+
These figures reflect typical professional charges in South Africa as of 2025–2026.
Understanding these costs is essential because:
- A trust may run for decades until minor beneficiaries reach maturity or conditions are met.
- Administrative neglect can have legal and tax consequences.
- Underfunded or poorly managed trusts can erode the very wealth they were created to protect.
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