FBE2604
Assignment 2 Semester 1 2025
Unique Number:
Due Date: 2025
QUESTION 1 (3 ANSWERS PROVIDED)
A trust is a legal arrangement through which ownership of a person’s property is
transferred to a trustee to be managed for the benefit of designated beneficiaries.
According to Land and Agricultural Bank of South Africa v Parker and Others (2005), a
trust does not exist as a separate legal entity but rather as a legal relationship created by a
trust instrument. The trust property is controlled by trustees, who are responsible for its
administration in accordance with the trust deed.
DISCLAIMER & TERMS OF USE
Educational Aid: These study notes are intended to be used as educational resources and should not be seen as a
replacement for individual research, critical analysis, or professional consultation. Students are encouraged to perform
their own research and seek advice from their instructors or academic advisors for specific assignment guidelines.
Personal Responsibility: While every effort has been made to ensure the accuracy and reliability of the information in
these study notes, the seller does not guarantee the completeness or correctness of all content. The buyer is
responsible for verifying the accuracy of the information and exercising their own judgment when applying it to their
assignments.
Academic Integrity: It is essential for students to maintain academic integrity and follow their institution's policies
regarding plagiarism, citation, and referencing. These study notes should be used as learning tools and sources of
inspiration. Any direct reproduction of the content without proper citation and acknowledgment may be considered
academic misconduct.
Limited Liability: The seller shall not be liable for any direct or indirect damages, losses, or consequences arising from
the use of these notes. This includes, but is not limited to, poor academic performance, penalties, or any other negative
consequences resulting from the application or misuse of the information provided.
, For additional support +27 81 278 3372
QUESTION 1 (3 ANSWERS PROVIDED)
A trust is a legal arrangement through which ownership of a person’s property is
transferred to a trustee to be managed for the benefit of designated beneficiaries.
According to Land and Agricultural Bank of South Africa v Parker and Others (2005),
a trust does not exist as a separate legal entity but rather as a legal relationship
created by a trust instrument. The trust property is controlled by trustees, who are
responsible for its administration in accordance with the trust deed.
Pat’s View: Trusts Have a Separate Legal Existence
Pat is incorrect in thinking that a trust has a separate legal existence. In South
African law, a trust is not a legal person. Unlike companies, which have legal
personality upon incorporation, a trust does not have separate legal status unless
specifically stated in legislation, such as in limited circumstances under the
Companies Act. The legal position is that while a trustee owns the trust assets in an
official representative capacity, this does not mean the trust itself is a separate legal
entity. The trust, therefore, cannot contract or be sued in its own name, as would be
the case with a company.
Rick’s View: No Distinction Between Trust Assets and Private Assets of the
Trustee
Rick’s understanding is incorrect. While a trustee is legally recognized as the owner
of trust assets, there is a clear legal distinction between trust assets and a trustee’s
private assets. Trust assets are managed for the benefit of the beneficiaries and
cannot be used for the personal benefit of the trustee. This principle was affirmed in
Land and Agricultural Bank of South Africa v Parker and Others, where the court
emphasized that trust assets must be clearly separated to prevent any risk of
mismanagement or personal liability being extended beyond what is legally
permissible. Furthermore, if a trustee becomes personally insolvent, their personal
creditors cannot claim trust assets as part of their estate. Similarly, trust creditors
cannot attach the personal assets of a trustee unless the trustee has acted outside
their legal authority.
Dave’s View: Parties to a Trust May Lose More Than What is Held in the Trust
Assignment 2 Semester 1 2025
Unique Number:
Due Date: 2025
QUESTION 1 (3 ANSWERS PROVIDED)
A trust is a legal arrangement through which ownership of a person’s property is
transferred to a trustee to be managed for the benefit of designated beneficiaries.
According to Land and Agricultural Bank of South Africa v Parker and Others (2005), a
trust does not exist as a separate legal entity but rather as a legal relationship created by a
trust instrument. The trust property is controlled by trustees, who are responsible for its
administration in accordance with the trust deed.
DISCLAIMER & TERMS OF USE
Educational Aid: These study notes are intended to be used as educational resources and should not be seen as a
replacement for individual research, critical analysis, or professional consultation. Students are encouraged to perform
their own research and seek advice from their instructors or academic advisors for specific assignment guidelines.
Personal Responsibility: While every effort has been made to ensure the accuracy and reliability of the information in
these study notes, the seller does not guarantee the completeness or correctness of all content. The buyer is
responsible for verifying the accuracy of the information and exercising their own judgment when applying it to their
assignments.
Academic Integrity: It is essential for students to maintain academic integrity and follow their institution's policies
regarding plagiarism, citation, and referencing. These study notes should be used as learning tools and sources of
inspiration. Any direct reproduction of the content without proper citation and acknowledgment may be considered
academic misconduct.
Limited Liability: The seller shall not be liable for any direct or indirect damages, losses, or consequences arising from
the use of these notes. This includes, but is not limited to, poor academic performance, penalties, or any other negative
consequences resulting from the application or misuse of the information provided.
, For additional support +27 81 278 3372
QUESTION 1 (3 ANSWERS PROVIDED)
A trust is a legal arrangement through which ownership of a person’s property is
transferred to a trustee to be managed for the benefit of designated beneficiaries.
According to Land and Agricultural Bank of South Africa v Parker and Others (2005),
a trust does not exist as a separate legal entity but rather as a legal relationship
created by a trust instrument. The trust property is controlled by trustees, who are
responsible for its administration in accordance with the trust deed.
Pat’s View: Trusts Have a Separate Legal Existence
Pat is incorrect in thinking that a trust has a separate legal existence. In South
African law, a trust is not a legal person. Unlike companies, which have legal
personality upon incorporation, a trust does not have separate legal status unless
specifically stated in legislation, such as in limited circumstances under the
Companies Act. The legal position is that while a trustee owns the trust assets in an
official representative capacity, this does not mean the trust itself is a separate legal
entity. The trust, therefore, cannot contract or be sued in its own name, as would be
the case with a company.
Rick’s View: No Distinction Between Trust Assets and Private Assets of the
Trustee
Rick’s understanding is incorrect. While a trustee is legally recognized as the owner
of trust assets, there is a clear legal distinction between trust assets and a trustee’s
private assets. Trust assets are managed for the benefit of the beneficiaries and
cannot be used for the personal benefit of the trustee. This principle was affirmed in
Land and Agricultural Bank of South Africa v Parker and Others, where the court
emphasized that trust assets must be clearly separated to prevent any risk of
mismanagement or personal liability being extended beyond what is legally
permissible. Furthermore, if a trustee becomes personally insolvent, their personal
creditors cannot claim trust assets as part of their estate. Similarly, trust creditors
cannot attach the personal assets of a trustee unless the trustee has acted outside
their legal authority.
Dave’s View: Parties to a Trust May Lose More Than What is Held in the Trust
