Dissolve a Trust in South Africa: Lessons from Ex Parte Application

A recent judgment from the Gauteng High Court has provided important clarity on what happens when trustees want to close down a trust – and more importantly, what not to do.

The Case in Brief

In Ex Parte Jaco Nel Familie Trust (2024/109954) [2025] ZAGPJHC 1168 , delivered on 19 November 2025, the sole remaining trustee of a family trust attempted to use voluntary insolvency proceedings to terminate the trust. His reasoning? The other two trustees were no longer available (one had passed away, the other resigned), and he did not want to continue administering the trust alone.

The catch? The trust was completely solvent, had no debts, no creditors, and sufficient funds to cover all its obligations.

Judge Windell dismissed the application, delivering a clear message: insolvency law is not a shortcut for closing down a solvent trust.

Why the Application Failed

The court emphasised several critical points.

Firstly, Voluntary surrender under sections 3 to 7 of the Insolvency Act 24 of 1936 is

designed for one purpose: to facilitate the orderly administration of an insolvent estate for the benefit of creditors. The court must be satisfied that:

1. The estate is insolvent; and

2. Creditors will derive some advantage from the sequestration.

   
   

As Judge Windell noted, quoting from Ex parte Hayes, voluntary surrender cannot be granted merely because it is convenient for the debtor. The requirement of advantage to creditors is central and cannot be waived.

Secondly, insolvency law protects creditors, not trustees. The judgment makes it clear that the sequestration procedure is not available to entities seeking an expedient way to close their affairs. The trustee's administrative difficulties, while genuine, did not justify using insolvency mechanisms designed to protect creditors when no creditors existed.

The Proper Way to Dissolve a Trust in South Africa

So if insolvency isn't the answer, what is? The court pointed to the Trust Property Control Act 57 of 1988 as the appropriate framework to dissolve a Trust in South Africa.

Option 1: Follow the Trust Deed

The first place to look is always the trust deed itself. Most well-drafted trust deeds contain provisions for the termination of the trust, distribution of remaining assets, and the process to be followed when trustees resign or are unable to act. If your trust deed provides a termination mechanism, follow it carefully. This typically involves:

1. Ensuring all beneficiaries are notified;

2. Settling all outstanding obligations;

3. Distributing remaining assets according to the deed; and

4. Filing the necessary documents with the Master of the High Court.

   
   

Option 2: Apply to the Master for Assistance

The Master of the High Court has significant powers under the Trust Property Control Act to assist with trust administration, including:

Appointing New Trustees. If the problem is simply a lack of trustees, the Master can appoint replacement trustees. Any interested party (including a remaining trustee or beneficiary) can apply to the Master for such an appointment.

Accepting Trustee Resignations. Trustees cannot simply walk away. A trustee must apply to the Master for formal acceptance of their resignation. The Master will consider whether accepting the resignation is in the best interests of the trust.

Option 3: Approach the High Court

Where more complex issues arise, the High Court has jurisdiction to:

• Give directions to trustees on how to proceed;

• Order the removal of trustees;

• Grant trustees discharge from their duties; and

• Authorise the termination and distribution of trust assets.

  
  

This is appropriate when there are disputes among beneficiaries, uncertainty about the trust deed's interpretation, or when the trust's objectives have become impossible to achieve.

Option 4: Vary or Terminate Under Section 13 of the Trust Property Control Act

Section 13 allows the High Court to vary or terminate a trust in certain circumstances, including when:

• The trust's objectives have been fulfilled;

• The objectives have become impossible to achieve;

• Circumstances have changed materially since the trust's creation; and

• The variation or termination would be in the beneficiaries' interests.

  
  

This requires a formal application to court with proper notice to all interested parties.

Practical Steps for Trustees Facing Difficulties

If you're a trustee struggling with administration, consider these steps:

1. Review Your Trust Deed

Understand what powers and obligations you have. Check whether the deed provides for Co-trustee appointments, Trustee succession, and/or trust termination procedures.

2. Communicate with Co-Trustees and Beneficiaries

Open communication can often resolve apparent deadlocks. Document all attempts to engage with other trustees.

3. Consult with a Trust Attorney

Before taking any formal steps, get professional advice on the most appropriate route forward. An attorney experienced in trust law can guide you through the options.

4. Consider the Master's Office

For straightforward matters like trustee appointments or resignations, the Master's office provides a less costly alternative to court applications.

5. Approach the High Court When Necessary

Do not try to force-fit your situation into the wrong legal framework. If your matter requires court intervention, make the appropriate application under the Trust Property Control Act.

Conclusion

Trusts are powerful estate planning tools, but they require proper administration and, when the time comes, proper termination. The Jaco Nel Familie Trust case serves as a reminder that shortcuts can be costly, not just financially, but in terms of time and unnecessary legal proceedings.

If you are facing difficulties as a trustee or need to wind down a trust, take the time to follow the correct procedures.

This article is for general information purposes only and does not constitute legal advice. If you need assistance with trust administration or dissolution, please consult with a qualified attorney.