• Amending a Trust Deed – it isn’t set in stone
• What happens if your Trust makes no provision for amendments?
• The difference between a living (inter vivos) and testamentary Trust.

From safeguarding your assets to empowering beneficiaries with their rights, and even making provisions for your final wishes, Trusts have a multitude of uses, and we’re here to unravel the mysteries surrounding Trust setups.

Brace yourself as we dive into the frequently asked questions, uncovering the truth about amendments, beneficiary rights, and securing your last will and testament.

Get ready to embark on a journey of Trust enlightenment like never before!

1. Can I amend my Trust Deed?

Yes, you can.

According to common law, the Trust Deed serves as a contract between the Founder and Trustees, with the Beneficiaries, who are seen as the “third-party”. This means that the parties involved – the Founder and Trustees – have the ability to make amendments through a mutual agreement, as long s they are following the principles of the Law of Contract.

To amend the Trust Deed, the consent of all parties who have signed the contract is generally required, unless the Trust Deed specifies otherwise. It’s important to note that beneficiaries who have previously accepted benefits are also considered as parties who have signed the contract, and thus their agreement becomes part of the amendment process.

Where the variation clause in the Trust Deed is silent on the involvement of beneficiaries, the common law rule which states that beneficiaries’ consent is needed if they have accepted benefits, will apply.

Depending on the type of amendment, your Trust Advisor will either prepare a replacement Trust Deed or a Resolution containing the clause amendments.

2. What if My Trust Deed does not make provision for amendments, can I still amend it?

Yes, the general rule is that where the Trust Deed does not contain a variation clause, the Trustees will still be able to amend the Trust Deed, in terms of the Law of contract – the original parties to the contract (Trust Deed), may amend the Trust Deed.

If the Founder is not alive, the Trustees in office along with the Beneficiaries who have accepted any benefits from Trust, must consent to the amendment.

3. My Trust Deed prohibits amendments, what do I do?

It is important to have your Trust Deed reviewed by one the specialist TTS Trust Advisors, whereafter your will receive recommendations regarding amendments to ensure your Trust Deed is in line with our laws.

If your Advisor is comfortable to proceed, the amendments will then occur in two stages:

First, the prohibition clause needs to be amended (by mutual agreement between the Founder (if still alive), Trustees in office and Beneficiaries who have accepted a benefit.

Secondly, the Trust Deed in its entirety or the resolution tabling the amendments, may be submitted to the Master of the High Court

Your Advisor may recommend filing a replacement Trust Deed, meaning your original Trust Deed will be replaced in its entirety with a new Trust Deed. This is generally recommended because it will prevent confusion when the original Deed needs to be read with the amendments.

If, however your amendment is affected by resolution, please ensure to keep your Trust Deed with the Resolution together as these two together constitute the amended Trust Deed.

4. Do my Trust beneficiaries have a claim on Trust assets?

If you have a TTS living discretionary Trust, the answer is no, however I need to qualify this answer.

A discretionary Trust assigns the sole discretion relating to all decisions, to the Trustees. These decisions include, but are not limited to, the investments made, allocations/distributions of income or capital, etc. This means no beneficiary has a vested right or claim against our Trust assets, they only have a hope to receive a benefit.

The beneficiaries do, however, have a right to proper administration of the Trust since Trust assets are administered for the benefit of the beneficiaries.

If you distribute taxable income to a beneficiary and the cash does not leave the Trust’s bank account, that beneficiary will now have a loan with, or vested right, in the Trust. We do however have a solution for this possible problem, Destinata Accounting will draw up supporting documents for the Beneficiary to donate the funds to the Trust, to clear the vested right account.

5. Why should I rather set up a living (inter vivos) Trust instead of a testamentary Trust?

A living Trust is created while the founder is alive and a testamentary Trust is created through the deceased’s Will, on death, thus the founder is deceased.

With a testamentary Trust you will first pay estate duty, executor’s fees, capital gains tax, and most probably auction fees, before effect is given to your bequests. By this time, you might have lost more than half your asset value just to cover these costs.

We recommend setting up a living, discretionary Trust, as we want you as the initial beneficiary to receive the benefit while you are alive. Some of these benefits are full asset protection against creditors, continuity of your legacy, tax savings (conduit principle) and eradicating your personal estate to eliminate or reduce estate duty, executor’s fees, capital gains tax, etc.

6. Do I still require a Will when my assets are in Trust?

Yes, you do.

Even though all your assets may be in Trust, you may still have a loan account with your Trust, which is an asset in your estate until settled in full. Since 2017, when legislation regarding loan accounts changed, it is even more important to address this in your Will.

You also need to appoint an executor to administer your estate. If you have minor children, you need to appoint a guardian for them. If you do not have a valid Will on death, you will die intestate, then the Master needs to appoint an executor and your wishes will not necessarily be carried out, since the heirs will be determined by the Intestate succession Act.

If you are wondering how you can utilize a Trust for your estate planning, investments or future generational wealth, then be sure to register for our FREE online training by clicking HERE