Few people know that trust companies originated in the Cape about 180 years ago, says David Knott, an expert in estates and wills at Private Client Trust, a division of Private Client Holdings, and a FISA member and FPSA®.
After the Cape was settled by the Dutch in 1652, there was a relatively high death rate among the settlers as a result of the treacherous sea journey between Europe and the East, skirmishes with the indigenous people, attacks from wild animals, and the harsh living conditions.
“It soon became evident that someone needed to look after the affairs of the children of the deceased settlers – those minors inheriting from deceased parents, or where heirs were unknown or absent from the Cape. The Board of Orphan Masters (the Orphan Chamber) was established in about 1673 to fulfil this need and operated under Dutch law.
“When the Cape fell to the British, the laws tended to follow English practice as opposed to Dutch. The Dutch marital regime was that of in community of property, with all control vesting in the husband, while the wife’s power was limited to that of a minor. English law was the opposite, with each spouse retaining their separate property and full contractual power. The new government therefore saw little reason for the existence of the Orphan Chamber, and King William IV proclaimed on March 4, 1832 that the Orphan Chamber be abolished.”
Minors, prodigals and absent beneficiaries did not disappear with the demise of the Orphan Chamber, and so, on April 22, 1834, during the governorship of Lord Charles Somerset, the first trust company in the world was established.
“Named the South African Association for the Administration and Settlement of Estates, its functions almost mirrored that of the old Orphan Chamber. The company drafted wills, administered estates and looked after trusts for those unable to attend to their own affairs,” says Knott.
Gradually, the concept of a corporate entity attending to fiduciary matters spread across the Cape Colony before migrating to Australia, New Zealand, Canada and the United States.