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Can a Testamentary Trust be changed after the death of the Testator should it be necessary to do so?
Trusts are estate-planning tools that can replace or supplement Wills; they also help to manage property during life. In simple terms, to set up a Trust, one-person transfers property to a second person to be held for the benefit of the third. The person who transfers the property is called the “Grantor” or the “Settlor”. The recipient of the property is called the “Trustee”; and they are the persons/entities who take legal title of the transferred property. A Trustee may also be a beneficiary – provided they are not the only beneficiary.
A Testamentary Trust or Trust Mortis Causa is thus a Trust which is established in a Will and comes into effect upon the death of the Testator (founder) of the Will. Instead of your assets passing directly to your beneficiaries, they pass into a Trust. Because a Trust allows the Grantor to specify conditions for receipt of benefits, as well as to spread payment of benefits over a period of time instead of making a single gift, many people prefer to include a Trust in their Wills to reinforce their preferences and goals after death.
Such Trusts are typically used to protect the interests of minors or dependants who are unable to take care of themselves. Some or all of the assets in the estate are moved to the Trust on the death of the Testator. The Trust is then administered by Trustees on behalf of the beneficiaries, who are more often than not the Minor Children or other dependants of the deceased. The appointed Trustees administer the Trust in terms of the Will until the Trust terminates, usually after a predetermined period or at a determined event, such as a Minor turning 18, or the death of an income beneficiary. If for any reason the Will is invalid, the Trust won’t come into effect.
As a rule of thumb the terms of a Testamentary Trust cannot be amended after death. The Trust Property Control Act 57 of 1988 (“the Act”) does however grant our Courts the power to amend a Trust Deed; where, for example, a provision brings about consequences which in the opinion of the Court, the founder of a Trust did not contemplate or foresee. This hampers the achievement of the intention of the founder and prejudices the interest of the beneficiaries or, becomes in conflict with the public interest.
An example of this power was recently decided by the Court in Hanekom v Voigt 2016 1 SA 416 (WCC), where they found that a variation of the provisions of a Testamentary Trust (brought about by agreement between the Trustee and the beneficiaries) was valid. Despite the fact that a Trust is of testamentary origin, it does not prevent the Trustees and beneficiaries from agreeing to an amendment. The Court further found that if the Testamentary Trust also confers upon a Trustee the power to decide when to terminate the Trust; it also implies that the Trustee has the power to amend the Trust Deed.
The provisions of the Act which requires a Trustee to, in exercising their powers, act with the care, diligence and skill which can reasonably be expected of a person who manages the affairs of another, still applies; and should a Trustee decide to amend the provisions of the Trust, the Trustee needs to exercise their authority in accordance with the Act.
It is therefore possible that your Trust provisions may be varied after your death.