Legal Considerations In Forming A Testamentary Trust

In a recent court case, van Rensburg v van Rensburg N.O. and Others (24 March 2020) issues around a testamentary trust were highlighted yet again. As the will of a deceased person forms the trust instrument, no further trust instrument is required to be lodged with the Master of the High Court. A will typically does not provide detailed provisions of how the trust should be administered. This often leads to issues arising at a later stage.

In this case, the joint will of the mother and father provided that upon the death of the father a testamentary trust had to be established for the benefit of the mother; i.e. the trustees had to apply the trust income, and even trust capital, of the trust, for the maintenance and benefit of the mother until her death. Upon her death the trust should have terminated and the trust assets were to be divided equally between the four children, or the survivors of them. All four children had also been appointed trustees of the testamentary trust in terms of the will. After the mother’s death the brother, requested the banking details from his sisters, so he could pay over their respective portions of the trust assets as required in terms of the will, in an effort to wind up the trust. Unfortunately, the one sister’s emails were intercepted and fraudulent bank account details were confirmed, upon which payment was effected. Her siblings were of the view that it was not fraud perpetrated against the trust, but rather her own issue. She approached the court to have the trustees removed as she was of the view that they, as trustees and beneficiaries of the trust, were conflicted. She requested the appointment of new trustees, for them to decide whether to pursue the matter against the trustees or the brother, whom she believed acted negligently to pay her share to an incorrect account.