Are there alternatives to physical trustee meetings?
As long as the trust instrument does not allow for methods which have the effect of contravening the common law, such as the abdication of powers and duties to anyone else, the trust instrument can determine which methods of participation is allowed, or specifically disallowed, such as the use of proxies, electronic or telephonic meetings.
A proxy allows a person, who is duly authorised, to represent a trustee at a meeting, if it is specifically allowed in the trust instrument. Such a proxy can merely act as the messenger of the trustee who he/she represents, and convey the thoughts and/or votes of the trustee who granted the proxy.
A stipulation in the trust instrument allowing a proxy to vote as he/she “may deem fit”, results in an abdication of a trustee’s powers, which is not allowed. If a trustee is allowed to exercise his/her independent judgement and form a personal view at a trustees meeting, he/she would be allowed to act similar to an appointed trustee of the trust, without being duly appointed as trustee, as required in terms of Section 6 of the Trust Property Control Act (Hoosen v Deedat case of 1999).
Even if another trustee of the trust acts as proxy for a co-trustee, allowing such a person to act and decide as he/she wishes is not allowed, as it would result in an abdication of power to the proxy.
Although it is accepted that a trustee, who cannot personally attend a meeting, can make use of a proxy (the Steyn v Blockpave case of 2011), it must not be broadly interpreted and only the use of a proxy as described above will result in valid decisions taken by the trustees.
With families living all over the world, together with an increase in digital communication, the use of “virtual” meetings may be practical. Although the common law does not prohibit the use of telephonic or other similar participation of trustees (Steyn v Blockpave case of 2011 encourages allowing trustees to provide their input telephonically or otherwise), the trust instrument should specifically allow for that.
To avoid abuse, it is recommended to provide in enough detail in the trust instrument specific, practical requirements for such meetings.
The use of emails seem impractical to hold a trustee meeting as it usually requires the exchange between trustees at the same time, which is often not the case with emails.
A round-robin resolution, whereby a trustee signs and sends (typically by email) the resolution to the next trustee to sign, is a practical way to exercise votes, and the common law does not prohibit the use of round-robin resolutions. It is recommended to specifically allow round-robin resolutions in a trust instrument to ensure the smooth running of the trust.
A number of trust instruments allow the use of an alternate trustee in the event that an appointed trustee cannot attend a meeting or is temporarily absent and cannot participate in the trust’s affairs. Even if the trust instrument allows for the appointment of a temporary trustee to serve in the place of another, such alternate trustee’s actions may be null and void, as only duly appointed trustees can act. It's suggested that trustees should rather make use of one of the other mechanisms mentioned to ensure participation of all trustees at all times.
Phia van der Spuy is a registered fiduciary practitioner of South Africa, a master tax practitioner (SA), a trust and estate practitioner and founder of Trusteeze, a professional trust advisory organisation.